All of the Following Methods Can Be Used to Estimate

question 117

Multiple Choice

All of the following methods can be used to estimate the cost of equity except:

• A)Like debt and preferred stock, cash flows from common equity are fixed.
• B)Firms have two sources of common equity, retained earnings and new stock issues, but only one single cost of common equity.
• C)From the shareholders' perspective, the opportunity cost of retained earnings is the return the shareholders could earn by investing the funds in long-term treasury securities.
• D)If the firm cannot invest its retained earnings to achieve a sufficient risk-adjusted return, shareholders would be better off receiving additional shares of stock.
• E)None of the above statements are correct.
• Clone of 2 prior items

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Definitions:

Horney

Karen Horney, a psychoanalytic theorist known for her theory of neurotic needs and her work on neurotic personality development.

Reaction Formation

A defense mechanism where an individual behaves in a manner opposite to their actual feelings or desires, often to hide their true impulses.

Neurotic Competitiveness

An indiscriminate need to win at all costs.

Hyper-Competitive

An intense and excessive desire to win and be more successful than others in every situation.