Retained Earnings Are a Cheaper Source of Funds Than the Sale

question 21

Multiple Choice

Retained earnings are a cheaper source of funds than the sale of new equity because ____.

• A) retention defers the payment of taxable dividends to shareholders
• B) there are no flotation costs
• C) new shares are usually priced below current market price
• D) All of these are correct

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Definitions:

Less-Hazardous Substances

Chemicals or materials that pose a lower risk to human health and the environment compared to their more dangerous counterparts.

Plastic

Synthetic or semi-synthetic organic compounds that are malleable and so can be molded into solid objects of diverse shapes, widely used for a variety of applications.

Recycled

The method of gathering and treating substances that would normally be discarded as waste and transforming them into new items.

North America

A continent located entirely in the Northern Hemisphere and mostly in the Western Hemisphere, composed of countries like the United States, Canada, and Mexico among others.