New Common Stock Is More Expensive Than K_e

question 9

Multiple Choice

New common stock is more expensive than k_e:

• A) to compensate for risk.
• B) to compensate for more dividends.
• C) to compensate for expansionary problems.
• D) to cover distribution costs.

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Definitions:

Attention Bias

The tendency of an individual's perception to be affected by their recurring thoughts at the expense of other stimuli.

Representativeness Heuristic

The tendency to make judgments about group membership based on physical appearances or the match between a person and one’s stereotype of a group rather than on available base rate information.

Divergent Thinking

Thinking that produces many solutions to the same problem.

Convergent Thinking

Thinking that produces the single best solution to a problem.