Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A) One of the advantages of common stock financing is that there is no dilution of owners' equity,as there is with debt.
• B) If the market price of a stock falls below its book value,the firm can be liquidated,with the book value proceeds then distributed to the shareholders.Thus,a stock's book value per share sets a floor below which the stock's market price is unlikely to fall.
• C) The preemptive right gives a firm's preferred stockholders preference to assets over common stockholders in the event the firm is liquidated.
• D) The steeper the demand curve for a firm's stock,the higher will be its flotation costs when it sells a new issue of common stock,other things held constant.
• E) All of the above statements are false.

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Definitions:

Abstract Concept

An idea or thought that is intangible and not based directly on physical reality, requiring a level of thinking and understanding beyond concrete objects.

Dissimilar

Different in nature or quality; not alike or similar.

Priming

A technique in psychology used to train or influence an individual's subconscious mind by exposing them to a particular stimulus prior to another task, affecting their response to it.

Behavior Research

The study of actions and reactions of individuals and groups in various contexts, typically to understand the underlying mechanisms of behavior.