In Determining the Cost of Retained Earnings

question 89

Multiple Choice

In determining the cost of retained earnings

• A) the dividend valuation model is inappropriate.
• B) flotation costs are included.
• C) growth is not considered.
• D) the capital asset pricing model can be used.

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Definitions:

Cross-bedding

A geological feature that forms as inclined layers of sediment are deposited across a horizontal surface, indicating ancient water or wind flows.

Siltstone

A sedimentary rock composed of consolidated silt-sized particles, generally mostly quartz.

Shale

A fine-grained sedimentary rock formed from clay and silt particles that tend to split along bedding planes.

Siltstone

A sedimentary rock composed mainly of silt-sized particles, formed by compaction and cementation of silt.