The Higher the Firm's Flotation Cost for New Common Equity,the

question 83

True/False

The higher the firm's flotation cost for new common equity,the more likely the firm is to use preferred stock,which has no flotation cost,and retained earnings,whose cost is the average return on the assets that are acquired.

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Definitions:

Reinforcement

In psychology, a process by which a behavior is strengthened or increased in frequency, often through the application of a reward or the removal of a negative stimulus.

Enforced Commitment

The obligation or dedication imposed by external factors or authorities.

Social Loafing

Individuals often put in less effort when part of a group compared to when they work by themselves.

Duplication of Effort

A situation where multiple people or groups are unknowingly working on the same task or problem, leading to a waste of resources.