Which of the Following Statements Is True

question 59

Multiple Choice

Which of the following statements is true?

• A)the cost of equity is more difficult to derive than the cost of preferred shares.
• B)the firm's shares will not be bid up if the firm does not pay dividends.
• C)The DDM cannot be used to value companies who do not pay dividends.
• D)equity financing will provide the corporation with a tax shield.

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Definitions:

Ethics Double-check

A process of verifying that actions or decisions adhere to moral and ethical standards.

Problem Definition

The process of identifying and outlining a problem or challenge in order to find workable solutions or answers.

Availability Bias

A cognitive bias that influences people to overestimate the importance of information that is readily available to them, often leading to skewed perceptions and judgments.

Anchoring Bias

A cognitive bias where individuals rely too heavily on an initial piece of information to make subsequent judgments or decisions.