Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, an increase in a company's stock price will increase its marginal cost of reinvested earnings (not newly issued stock), r_s.
• B) All else equal, an increase in a company's stock price will increase its marginal cost of new common equity, r_e.
• C) Since the money is readily available, the after-tax cost of reinvested earnings (not newly issued stock) is usually much lower than the after-tax cost of debt.
• D) If a company's tax rate increases but the YTM on its noncallable bonds remains the same, the after-tax cost of its debt will fall.
• E) When calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.

---

Definitions:

Forward Scheduling

A planning method that starts from a particular date and moves forward in time to determine the timeline for project or production activities.

Backward Scheduling

A method of scheduling tasks starting with the end goal and working backward to determine the necessary steps and timing.

Christmas Shopping

The purchasing of gifts, decorations, and other festive items in preparation for the Christmas season, typically involving increased retail activity.

Purchase Requisition

A document or electronic form used to formally request the purchase of goods or services within an organization.