Which of the Following Differentiates the Cost of Retained Earnings

question 60

Multiple Choice

Which of the following differentiates the cost of retained earnings from the cost of newly-issued common stock?

• A) The cost of the pre-emptive rights held by existing shareholders.
• B) The greater marginal tax rate faced by the now-larger firm.
• C) The flotation costs incurred when issuing new securities.
• D) The larger dividends paid to the new common stockholders.

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Definitions:

Prejudicial Error

refers to a mistake in the procedure or ruling of a court trial that is likely to affect the trial's outcome, warranting a review or reversal of the decision.

Appeal

A process by which a higher court reviews the decision of a lower court.

Jury

A group of people sworn to give a verdict in a legal case on the basis of evidence submitted to them in court.

Judge

An official appointed to decide cases in a court of law or other judicial assembly.