Since Retained Earnings Are Viewed as a Fully Subscribed Issue

question 6

Multiple Choice

Since retained earnings are viewed as a fully subscribed issue of additional common stock, the cost of retained earnings is ________.

• A) less than the cost of new common stock equity
• B) equal to the cost of new common stock equity
• C) greater than the cost of new common stock equity
• D) not related to the cost of new common stock equity

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Definitions:

Enforce the Instrument

The act of legally compelling compliance with the terms outlined in a formal legal document, such as a contract or will.

Notice of Dishonor

A notification that a negotiable instrument, such as a check or promissory note, has been presented for payment and that payment has been refused.

Banking Day

A business day during which financial institutions are open for business with the public, typically excluding weekends and public holidays.

Calendar Days

The consecutive days on a calendar, including all weekdays and weekend days.