The Cost of a Security to a Company May Differ

question 20

Multiple Choice

The cost of a security to a company may differ from the security's yield in the capital markets due to:
I.Flotation costs
II.Agency costs
III.Taxes

• A)I only
• B)I and II only
• C)I and III only
• D)I and II and III

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Definitions:

DSO Analysis

Stands for Days Sales Outstanding, a calculation used to assess the average number of days it takes a company to collect payment after a sale has been made.

Seasonal Changes

Variations in business or economic activity that occur within specific seasons or periods of the year, often predictable and recurring.

Working Capital Management

The management of a company's short-term assets and liabilities to ensure it has adequate funds to continue its operations and avoid financial distress.

Current Assets

Current assets are assets that a company expects to convert into cash, sell, or consume within one year or within its operating cycle, whichever is longer.