Which of the Following Statements Is Most Correct

question 22

Multiple Choice

Which of the following statements is most correct?

• A) A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, the cost of retained earnings is generally lower than the after-tax cost of debt financing.
• B) The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's stock price.
• C) The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's earnings per share.
• D) If a firm finds that the cost of debt financing is currently less than the cost of equity financing, an increase in its debt ratio will always reduce its cost of capital.
• E) Statements a and b are correct.

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Definitions:

Inner-City Areas

Regions located near the central business district of a city, often characterized by higher density, older housing, and sometimes socio-economic challenges.

Media Coverage

The reporting of events and topics by various outlets such as television, newspapers, and the internet.

Morally Imposed Duty

An obligation to act or behave in certain ways based on ethical standards and moral principles.

Media Stereotypes

Oversimplified and generalized representations of particular groups of people or ideas propagated through various media platforms.