Which of the Following Differentiates the Cost of Retained Earnings

question 58

Multiple Choice

Which of the following differentiates the cost of retained earnings from the cost of newly-issued common stock?

• A) the cost of the pre-emptive rights held by existing shareholders
• B) the greater marginal tax rate faced by the now-larger firm
• C) the flotation costs incurred when issuing new securities
• D) the larger dividends paid to the new common stockholders

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Definitions:

Primary Process Thinking

A mode of thinking primarily in the unconscious mind, driven by the pleasure principle and characterized by illogical and associative connections.

Generalization

The process of applying information or conclusions from specific instances to broader contexts or groups, often simplifying complex information.

Assimilation

Piaget’s term for incorporation of new information into an existing cognitive structure.

Accommodation

Adjusting one's schemas and understanding to incorporate new and differing information or experiences.