Reasons that firms may find themselves with relatively high costs of capital include which of the following?
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 above reasons can contribute to a firm having relatively high costs of capital. Emerging markets may have higher risk premiums associated with their investments, while small firms may find it difficult to generate interest from investors who prefer larger, more established companies. Family-owned firms may also face issues with control and valuation if they were to access public markets, which could discourage them from trying to lower their costs of capital through those avenues.

Reasons That Firms May Find Themselves with Relatively High Costs