Which One of the Following Is the Primary Determinant of a Firm's

question 55

Multiple Choice

Which one of the following is the primary determinant of a firm's cost of capital?

• A) Debt-equity ratio of any new funds raised
• B) Marginal tax rate
• C) Pretax cost of equity
• D) Aftertax cost of equity
• E) Use of the funds raised

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Definitions:

Clearinghouse

An intermediary body that facilitates the exchange of payments, securities, or derivatives transactions among its members.

Payor Bank

A bank that is responsible for paying a check or draft on behalf of a customer, typically the bank where the check writer has an account.

Depository Bank

A financial institution that holds and manages securities (stocks, bonds, etc.) for its clients and may also offer other banking services.

Payor Bank

A bank that is responsible for paying a check or draft presented for payment against an account.