Since Retained Earnings Are Viewed as a Fully Subscribed Issue

question 137

Multiple Choice

Since retained earnings are viewed as a fully subscribed issue of additional common stock, the cost of retained earnings is

• A) greater than the cost of new common stock equity.
• B) less than the cost of new common stock equity.
• C) not related to the cost of new common stock equity.
• D) equal to the cost of new common stock equity.

---

Definitions:

Indirectly Contribute

To assist or influence in a secondary manner or through an indirect channel or system.

Real Asset

Physical or tangible assets, such as real estate, commodities, or natural resources, which have intrinsic value.

Consumer Durables

Long-term goods purchased by consumers that are expected to last for several years, such as appliances, cars, and furniture.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.