Transaction Costs Are Best Defined as the

question 106

Multiple Choice

Transaction costs are best defined as the

• A) various costs of different goods and services.
• B) cost of one good in terms of another; that is,the price of apples in terms of oranges.
• C) costs involved in borrowing money from someone,that is,the interest that must be paid for the use of someone else's money.
• D) costs associated with the time and effort necessary to make an exchange.

---

Definitions:

Share-Based Compensation

A form of pay given to employees and executives that is based on the company's stock, intended to align their interests with those of the company's shareholders.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity, usually at the choice of the bondholder.

Net-of-Tax Interest Expense

The interest expense after considering the effects of income tax, representing the actual cost of borrowing to the entity.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction, including the rules and standards for financial reporting.