Which of the Following Is Not an Advantage of Raising

question 41

Multiple Choice

Which of the following is not an advantage of raising equity via the issue of ordinary shares?

• A)Dividend payment is not an obligation.
• B)It reduces borrowing costs.
• C)Borrowing entails higher transaction costs than raising equity,as the company has to prepare disclosure documents to attract lenders.
• D)None of the given options.

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Definitions:

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.

Long Run

A period of time in economics during which all factors of production and costs are variable.

Apple Orchard

An agricultural area dedicated to the cultivation of apple trees for the purpose of producing apples.

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments leading to the establishment of a market balance.