Which of the Following Statements Is Incorrect Concerning Private Placements

question 57

Multiple Choice

Which of the following statements is incorrect concerning private placements?

• A) Terms of the financing can be custom-tailored.
• B) The securities are not made available to the public.
• C) The securities are often less marketable.
• D) Only a small amount of corporate debt is financed in this manner.

Identify and describe various approaches used in estimating the cost of equity.

Explain factors that affect the Weighted Average Cost of Capital (WACC).

Understand the component costs that comprise a firm's preferred stock and how they are calculated.

Distinguish which component costs are expressed on an after-tax basis in the calculation of a firm's cost of capital.

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Definitions:

FIFO

FIFO stands for "First In, First Out," a method used in inventory management and accounting where the oldest inventory items are recorded as sold first.

Ending Inventory

The value of goods available for sale at the end of an accounting period, after accounting for all sales and purchases.

Market Value

The present cost for acquiring or selling an asset or service in an open market.

LIFO Inventory

An inventory valuation method that assumes the last items placed in inventory are the first sold.