For a Corporation Such as AT&T, What Are the Two

question 114

Multiple Choice

For a corporation such as AT&T, what are the two primary advantages of equity financing?

• A) It never has to be paid back and flotation costs are low.
• B) There is no obligation to pay dividends or to repay the money obtained from the sale of stock.
• C) Interest payments are less than debt financing and principal does not have to be repaid.
• D) Ownership is spread among many individuals and no interest payments are required.
• E) Investors pay top dollar for stock issues and the corporation has higher ongoing expenses.

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Definitions:

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Pretzels

A type of baked pastry made from dough that is commonly shaped into a knot and often salted.

Budget Constraint

A representation of all the combinations of goods and services that a consumer can afford with a fixed income and prices.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing combinations that give the consumer the same level of satisfaction.