Which of the Following Statements Is Correct

question 45

Multiple Choice

Which of the following statements is correct?

• A) An increase in the flotation cost required to sell a new issue of stock will increase the cost of retained earnings.
• B) An increase in a firm's tax rate will increase the component cost of debt, provided the YTM on the firm's bonds is not affected.
• C) When the WACC is calculated, it should reflect the cost of new common stock, retained earnings, preferred stock, long-term debt, short-term bank loans if the firm normally finances with bank debt, and accounts payable if the firm normally has accounts payable on its balance sheet.
• D) If a firm has been suffering accounting losses that are expected to continue into the foreseeable future, and therefore its tax rate is zero, then it is possible for the after-tax cost of preferred stock to be less than the after-tax cost of debt.

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Definitions:

Daytime Television

Television programming that is typically aired during the morning and afternoon hours on weekdays, often including talk shows, news, soap operas, and game shows.

Cinematograph

An early motion picture device and film projector, marking significant advancements in the history of cinema.

Technological Advancement

The process of developing and applying new technologies to enhance capabilities or solve problems.

Radio Messages

Audio content broadcast over radio waves intended to inform, entertain, or communicate to a wide audience.