Which of the Following Statements Is Most Correct

question 27

Multiple Choice

Which of the following statements is most correct?

• A) The before-tax cost of preferred stock may be lower than the before-tax cost of debt,even though preferred stock is riskier than debt.
• B) If a company's stock price increases,this increases its cost of equity capital.
• C) If the cost of equity capital is low enough,it may be cheaper to issue common stock than it is to finance projects with retained earnings.
• D) Both a and b are correct.
• E) Answers a,b,and c are all correct.

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Definitions:

Reducing Imports

A strategy aimed at decreasing the volume of goods and services a country buys from abroad, often to support domestic production.

Voluntary Agreements

Contracts or arrangements entered into freely by parties without coercion, commonly seen in business or employment contexts.

Subsidies

Financial support provided by governments to entities, aimed at reducing the cost of services and goods, promoting economic and social policies.

Balance of Trade Deficit

A situation where the value of a country's imports exceeds the value of its exports, resulting in a net outflow of domestic currency to foreign markets.