The Cost of Newly Issued Ordinary Shares Is Greater Than

question 120

Multiple Choice

The cost of newly issued ordinary shares is greater than the current cost ordinary equity because of

• A)capital gains taxes on retained earnings.
• B)flotation costs on newly issued ordinary shares.
• C)capital gains taxes on newly issued ordinary shares.
• D)all of the above

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Definitions:

Bilateral Contract

An agreement involving two parties where each promises to perform an act in exchange for the other's act.

Unilateral Contract

A legal agreement in which only one party makes a promise or undertakes a performance obligation in exchange for an act by the other party.

Breach of Contract

An act of breaking the terms set out in a contract, which can result in legal consequences for the party that fails to honor its commitments.

True Value

The genuine or actual worth of an item, service, or financial instrument as determined by underlying characteristics and market conditions.