Which of the Following Is NOT True Regarding Stock Issuances

question 77

Multiple Choice

Which of the following is NOT true regarding stock issuances?

• A) They are always better than debt for raising capital.
• B) Their effect on stock price is a concern.
• C) They can require a company to share future earnings with all new shareholders.
• D) Dilution of ownership is a special concern.
• E) All of the above statements are true.

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Definitions:

Net Working Capital

The gap between a business's current assets and its current liabilities, showcasing the firm's liquidity.

Capital Cost Allowance (CCA)

The Capital Cost Allowance (CCA) is a tax deduction available in Canada that represents a yearly depreciation charge for capital assets used in business activities, allowing businesses to write off the cost of assets over time.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profit.

Required Return

The minimum profit that investors expect to earn on their investment to compensate for the risk taken.