________ represent a favorable source of meeting long-term financing needs because there are no interest payments, dividends, or underwriting fees required when using this source.
A) Secured bonds
B) Debentures
C) Warrants
D) Retained earnings

Question

Quizplus · Accepted Answer

Retained earnings represent profits that have been reinvested back into the company rather than paid out to shareholders as dividends. Since there are no interest payments, dividends, or underwriting fees associated with this source of financing, it can be an attractive option for meeting long-term financing needs. However, companies should also consider the opportunity cost of not distributing earnings to shareholders, as well as the potential tax implications of retaining earnings.

________ Represent a Favorable Source of Meeting Long-Term Financing Needs