Which of the Following Statements Is True About Cease-And-Desist Orders

question 29

Multiple Choice

Which of the following statements is true about cease-and-desist orders?

• A)They are voluntary statements that have no legal ramifications.
• B)They require that the FTC place a representative in the advertising department of the accused advertiser to monitor further campaigns.
• C)They prohibit further use of the offending advertisement.
• D)They prohibit any kind of advertisement by the offending company.
• E)They are issued by the Better Business Bureau.

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Definitions:

WACC

Weighted Average Cost of Capital, a calculation of a firm's capital cost that weighs each category of capital (equity, debt) proportionately.

CGT

Capital Gains Tax, a tax on the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale.

Selling New Common Stock

The process whereby a company issues and sells additional shares of its common stock to investors to raise capital.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and it can also be viewed as the risk-free rate of return plus a risk premium.