Which of the Following Is False Regarding the Issue of Stock

question 81

Multiple Choice

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

• A)The issuance of stock decreases several important financial ratios.
• B)Issuing bonds dilutes the voting power of the stockholders.
• C)Corporations are not required to return the investment to the stockholders.
• D)Investors expect to earn a higher rate of return on stocks than bonds.

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Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to make a profit.

Producing

The act or process of creating goods or services using inputs like labor, materials, and machines.

Maximum Weekly Profit

The highest amount of financial gain a business can achieve in one week, based on its revenue and costs.

Market Price

The existing cost at which a service or asset is available for purchase or sale on the open market.