Compare the Relative Costs of Using Long-Term Equity Financing and Those

question 88

Essay

Compare the relative costs of using long-term equity financing and those of using long-term debt financing.

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Definitions:

Par Value

A nominal value assigned to a stock or bond, representing its face value rather than its market value.

Stock Split

This action increases the number of shares of a corporation by issuing more shares to current shareholders, which typically results in a decrease in the per-share price, making the stock more accessible to a wider range of investors.

Stock Split

A corporate action where a company divides its existing shares into multiple shares, effectively reducing the price of individual shares without changing the overall market capitalization.

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.