Which of the following statements is CORRECT?
A. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation.
B. Because of tax effects, an increase in the risk-free rate will have a greater effect on the after-tax cost of debt than on the cost of common stock as measured by the CAPM.
C. If a company's beta increases, this will increase the cost of equity used to calculate the WACC, but only if the company does not have enough reinvested earnings to take care of its equity financing and hence must issue new stock.
D. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC.
E. When calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation.
Answer: E
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A. utilitarian B. objectivity C. rights D. justice
______ methods of job evaluation break a job down into components like particular skills or abilities, and then they assign a number of points to each component based on its difficulty.
A. Rate range B. Pay structure C. Point-factor D. Equity theory
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A) Six months in advance for any plant closing. B) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, but not for temporary layoffs. C) Sixty days in advance for any plant closing. D) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, and for layoffs of 50 employees or 33 percent of workers at a site for 30 days or more. E) Sixty days in advance for plant closings resulting in the loss of 50 or more jobs, and 30 days in advance for layoffs affecting more than 33 workers at the site.
Which of the following statements about portfolio income from investments that are not held in a tax-deferred account, is accurate?
A) It is also called investment income. B) It is normally in the form of dividends and interest. C) It must be reported on your tax return. D) It may be taxed at a lower rate than wages and salaries are. E) All of the above