Which method of corporate finance is used the most? Why?
What will be an ideal response?
Reinvestment accounts for about 75 percent of new financial capital for corporations. Smaller corporations may find it difficult to find people willing to buy shares of stock, and the existing owners may not want other owners involved in electing directors. Smaller firms may also have a difficult time getting people to lend to them. So, they have to rely on reinvesting profits.
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The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what will happen if the government offers a $30 subsidy to airlines that serve this route?
A) Both firms will enter profitably. B) Firm A will decide not to enter since firm B will. C) Firm B is still better off not entering. D) Neither firm will have a dominant strategy.
When the slope of a demand curve is constant, price elasticity of demand can vary.
Answer the following statement true (T) or false (F)