The Cost of Retained Earnings Is Less Than the Cost

question 87

Multiple Choice

The cost of retained earnings is less than the cost of new common stock because

• A) marginal tax brackets increase.
• B) flotation costs are incurred when new stock is issued.
• C) dividends are not tax deductible.
• D) accounting rules allow a deduction when using retained earnings.

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Definitions:

National Forest

Federally-owned forest lands primarily designated for sustainable timber harvesting, recreation, and conservation.

Parameter

A characteristic or measure that can describe an aspect of a population, often estimated using sample data.

General Social Survey

A sociological survey used to collect data on demographic characteristics and attitudes of the American population.

GSS

General Social Survey, a research project that collects data on societal trends and attitudes in the U.S.