Which of the Following Statements Is Most Correct

question 84

Multiple Choice

Which of the following statements is most correct?

• A) If a company's tax rate increases but the yield to maturity of its noncallable bonds remains the same,the company's marginal cost of debt capital used to calculate its weighted average cost of capital will fall.
• B) All else equal,an increase in a company's stock price will increase the marginal cost of retained earnings.
• C) All else equal,an increase in a company's stock price will increase the marginal cost of issuing new common equity.
• D) Answers a and b are both correct.
• E) Answers b and c are both correct.

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Definitions:

Authority And Responsibility

A management principle stating that a person with authority (power to make decisions) should also be responsible for the outcomes of those decisions.

Performance Evaluation

The process of assessing the performance of employees, processes, or systems against set benchmarks or standards.

Financial Budgets

Detailed plans that outline an organization's financial goals and the strategies to achieve them, including projections of income, expenses, and cash flow.

Operating Budgets

An operating budget details the forecasted revenue and expenses for the day-to-day operations of a company for a specific period.