Generally, Managers of Corporations Prefer Internally Generated Cash to Finance

question 38

Multiple Choice

Generally, managers of corporations prefer internally generated cash to finance their capital expenditures because

• A)they can avoid the discipline of financial markets.
• B)the costs of issuing new securities are high.
• C)the costs of issuing new securities are high and the announcement of a new equity issue is usually bad news for investors.
• D)they can avoid the discipline of financial markets, the costs of issuing new securities are high, and the announcement of a new equity issue is usually bad news for investors.

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Definitions:

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, which integrates and coordinates all bodily functions and processes information.

Sedatives

Sleep-inducing drugs that tend to decrease central nervous system and behavioral activity.

Stimulants

Drugs that tend to increase central nervous system and behavioral activity.

Hallucinogens

A diverse group of drugs that have powerful effects on mental and emotional functioning, marked most prominently by distortions in sensory and perceptual experience.