The Reason Why Retained Earnings Have a Cost Equal to Rs

question 75

True/False

The reason why retained earnings have a cost equal to rs is because investors think they can (i.e., expect to) earn rs on investments with the same risk as the firm's common stock, and if the firm does not think that it can earn rs on the earnings that it retains, it should pay those earnings out to its investors. Thus, the cost of retained earnings is based on the opportunity cost principle.

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Definitions:

Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, affecting daily functioning.

Biological Approach

A perspective in psychology that examines behavior and mental processes through the lens of biological processes, such as genetics and neurochemistry.

Behavior Change

The modification of human behaviors, which can be achieved through various strategies and interventions.

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