The Cost of Equity Raised by Retaining Earnings Can Be

question 68

True/False

The cost of equity raised by retaining earnings can be less than, equal to, or greater than the cost of external equity raised by selling new issues of common stock, depending on tax rates, flotation costs, the attitude of investors, and other factors.

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Definitions:

10-day limitation

A time constraint within which certain actions must be taken or rights may be lost.

Incidental Damages

Minor costs or expenses that arise indirectly from a breach of contract.

Substitute Goods

are products or services that can be used in place of each other due to their similar characteristics, affecting consumer choice.

Reasonable Expenses

Costs that are necessary and appropriate for completing a task or project, considering the circumstances.