Answered: The most difficult component cost of…

The most difficult component cost of financing to measure is the cost of ________ a Preferred stock b Short-term debt c Common stock

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 7MC

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Question

The most difficult component cost of financing to measure is the cost of ________

	a	Preferred stock
	b	Short-term debt
	c	Common stock

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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