Firms Raise Capital at the Total Corporate Level by Retaining

question 73

True/False

Firms raise capital at the total corporate level by retaining earnings and by obtaining funds in the capital markets.They then provide funds to their different divisions for investment in capital projects.The divisions may vary in risk, and the projects within the divisions may also vary in risk.Therefore, it is conceptually correct to use different risk-adjusted costs of capital for different capital budgeting projects.

---

Definitions:

Drive Theory

A psychological theory suggesting that motivation is a result of biological drives that require satisfaction.

Pull Theories

Theories that propose mechanisms or reasons why people are "pulled" towards certain behaviors or actions, often used in migration studies or motivational psychology.

Expectancy-value Theory

A theory which states that the motivation to engage in a behavior is determined by the expected outcomes and the value of those outcomes to the individual.

Social Needs

Fundamental human needs that pertain to belonging, affection, acceptance, and friendship, which are essential for psychological and social well-being.