Which of the following statements is most correct?
A) If a company's tax rate increases but the yield to maturity of its noncallable bonds remains the same,the company's marginal cost of debt capital used to calculate its weighted average cost of capital will fall.
B) All else equal,an increase in a company's stock price will increase the marginal cost of retained earnings.
C) All else equal,an increase in a company's stock price will increase the marginal cost of issuing new common equity.
D) Answers a and b are both correct.
E) Answers b and c are both correct.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is most correct?
A) If a company's tax rate increases but the yield to maturity of its noncallable bonds remains the same,the company's marginal cost of debt capital used to calculate its weighted average cost of capital will fall.
B) All else equal,an increase in a company's stock price will increase the marginal cost of retained earnings.
C) All else equal,an increase in a company's stock price will increase the marginal cost of issuing new common equity.
D) Answers a and b are both correct.
E) Answers b and c are both correct.

Which of the Following Statements Is Most Correct