To Avoid the Awkward Process of Transferring the Cost of Capital

question 7

Multiple Choice

To avoid the awkward process of transferring the cost of capital going from the parent to the subsidiary,it is advisable to use the _______ rate.

• A)prime market interest
• B)all-equity discount
• C)all-debt discount
• D)both the equity and debt discount

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Definitions:

Trustee

An elected representative who has the authority to make decisions on behalf of their constituents, guided by their own judgment and conscience.

Conscience

The inner sense of what is right or wrong in one's conduct or motives, urging one toward right action.

Society

A group of individuals involved in persistent social interaction, or a large social group sharing the same geographical or social territory, typically subject to the same political authority and dominant cultural expectations.

Formal Rules

Officially sanctioned guidelines and procedures that govern behavior within organizations or societies.