Managers Should Consider ________ for External Financing When Agency Costs

question 35

Multiple Choice

Managers should consider ________ for external financing when agency costs are significant.

• A) long-term debt
• B) retained earnings
• C) internal equity
• D) short-term debt

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Definitions:

Market Rate

The prevailing price or interest rate at which goods, services, or securities are traded in a competitive marketplace.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specified price.

Usury Law

Legislation that sets maximum interest rates that can be charged on loans, to prevent excessive interest.

Market Equilibrium

A market state where the quantity supplied equals the quantity demanded, leading to a balance in price and volume.