Question

With regard to financing through the issuance of stock, which of the following is true? A....

With regard to financing through the issuance of stock, which of the following is true?

A. Common stocks carry a fixed maturity date at which point they need to be paid.

B. ssuing common stock can help raise new capital but it adversely effects the company's bond rating

C.There is no fixed cost associated with issuing stock.

D. It is always easier to sell common stock than any other asset or investment (e.g., a bond).

E. None of these

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Answer #1

A is not true. Common stocks do not have a fixed maturity date, unlike bonds

B is not true. Issuing common stock decreases the financial leverage, and usually improves the company's bond rating

C is true. There is no fixed cost with issuing stock, unlike bonds

D is not true. It is not always easier to sell common stock. Selling bonds is usually easier

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