Which of the Following Statements Is Not True

question 25

Multiple Choice

Which of the following statements is not true?

• A) Dividend payments but not capital gains are costs to the firm.
• B) Stockholder's expected return equals the firm's cost of equity.
• C) Payments to current stockholders are the implicit cost of the infusion of new equity capital.
• D) The security market line provides information as to the cost of equity for a firm.
• E) The return that the investor in a security receives is the cost of that security to the company that issued the security.

Identify the challenges of idle production capacity and strategies for managing demand fluctuations.

Appreciate the continuum of offerings between tangible products and intangible services.

Recognize the cost structures associated with service delivery, including inventory carrying costs.

Understand how services can be classified by various criteria including the level of tangible vs. intangible attributes, and the sector (public, private, nonprofit).

---

Definitions:

Competitive Pressures

Forces in the market that compel companies to compete more aggressively, often leading to improvements in quality, service, and prices for consumers.

Market System

An economic system where decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.

Fundamental Question

Refers to basic inquiries that address the core and essential aspects within a field or subject, often regarding what, how, and for whom to produce in economics.

Profit Potential

The capacity or possibility for a business or investment to generate earnings over costs.