Which of the Following Statements Is Correct

question 27

Multiple Choice

Which of the following statements is correct?

• A) The flotation-adjusted cost of equity will always be less than the cost of equity that has not been adjusted for flotation costs.
• B) The flotation-adjusted cost of equity will always be more than the cost of equity that has not been adjusted for flotation costs.
• C) The flotation-adjusted cost of equity may be more than or less than the cost of equity that has not been adjusted for flotation costs.
• D) None of the statements are correct.

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Definitions:

Annual General Meetings

Mandatory yearly gatherings of a company's executives, directors, and shareholders to discuss the company’s performance, its future, and to vote on key issues.

Dilution

A reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

Business Combination

A transaction or event in which an acquirer gains control over one or more businesses, typically involving mergers, acquisitions, or consolidations.

Parent-subsidiary

The relationship between two corporations in which one corporation, the parent, owns sufficient voting stock in another corporation, the subsidiary, to control its board of directors.