Reasons that firms may find themselves with relatively high costs of capital include:
A)The firms reside in emerging countries with undeveloped capital markets.
B)The firms are too small to easily gain access to their own national securities market.
C)The firms are family owned and they choose not to access public markets and lose control of the firm.
D)All of the above.

Question

Quizplus · Accepted Answer

All of the choices listed can contribute to a firm having higher costs of capital. Firms in emerging countries may have limited access to capital markets or face higher risk premiums, smaller firms may not have the same access to financing as larger firms, and family-owned firms may choose to forego public markets and pay higher costs of capital to maintain control.

Reasons That Firms May Find Themselves with Relatively High Costs