If a Firm Issuing Additional Common Equity Can Estimate the Return

question 24

Multiple Choice

If a firm issuing additional common equity can estimate the return investors require on its stock (k_e) at 12% and knows that flotation costs are about 18%, its component cost of equity capital for the new funds will be:

• A)30.0%
• B)14.2%
• C)13.6%
• D)14.6%

Distinguish between different forms of money such as fiat money, cryptocurrencies, and physical currency.

Explain the role of credit unions, finance companies, and Federal Reserve in the financial system.

Understand bartering as an alternative to the use of money in transactions.

Recognize the characteristics of money that make it effective in its various roles (divisibility, durability, acceptability, stability, portability).

---

Definitions:

Industry Life Cycle

A concept describing the stages of growth and development that a sector or industry goes through, from emergence to decline.

Stalwarts

Well-established companies known for their durability, stable earnings, and regular dividend payments.

Slow-growers

Companies or stocks that exhibit lower-than-average growth in terms of revenue or earnings, often offering stable dividends.

Industry Life Cycle

The Industry Life Cycle describes the stages of growth and development that an industry undergoes, beginning with its introduction, growth, maturity, and eventual decline.