Stakeholders prefer internally generated funds to external funds because ______.
A) internal funds avoid the discipline of the financial markets
B) internal funds avoid the transactions costs of external issues
C) they indicate the corporation has free cash flow
D) More than one of the above
E) None of the above

Question

Quizplus · Accepted Answer

Both option A and B are reasons why stakeholders prefer internally generated funds over external funds. Option C is not necessarily a reason why stakeholders prefer internal funds, as free cash flow can be an indication of inefficient or ineffective resource allocation.

Stakeholders Prefer Internally Generated Funds to External Funds Because ______