Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) all else equal, an increase in a company's stock price will increase its marginal cost of reinvested earnings (not newly issued stock), rs.
• B) all else equal, an increase in a company's stock price will increase its marginal cost of new common equity, re.
• C) since the money is readily available, the after-tax cost of reinvested earnings (not newly issued stock) is usually much lower than the after-tax cost of debt.
• D) if a company's tax rate increases but the ytm on its noncallable bonds remains the same, the after-tax cost of its debt will fall.
• E) when calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.

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Definitions:

Gestalt Psychology

A theory of mind and behavior that proposes the human brain perceives things as whole patterns and configurations, rather than merely as the sum of their parts.

Psychoanalysis

A set of psychological theories and therapeutic techniques related to the study of the unconscious mind, founded by Sigmund Freud.

Humanistic Psychology

A psychological approach focusing on the comprehensive analysis of individuals and the distinctiveness of everyone's personal experiences.

Behaviorists

Researchers or practitioners who focus on observable behaviors rather than internal mental processes as the key to understanding psychological phenomena.