Which of the Following Statements Is Most Correct

question 84

Multiple Choice

Which of the following statements is most correct?

• A) If a company's tax rate increases but the yield to maturity of its noncallable bonds remains the same,the company's marginal cost of debt capital used to calculate its weighted average cost of capital will fall.
• B) All else equal,an increase in a company's stock price will increase the marginal cost of retained earnings.
• C) All else equal,an increase in a company's stock price will increase the marginal cost of issuing new common equity.
• D) Answers a and b are both correct.
• E) Answers b and c are both correct.

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Definitions:

Hourly Wage

The rate of pay employees receive for one hour of work, an important indicator of labor costs and worker compensation in an economy.

Marginal Resource Cost

The change in total cost that comes from producing one additional unit of a good or service.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production.

Marginal Revenue Product

The additional revenue a firm generates by employing one more unit of input, such as labor or capital.