New common stock is more expensive than required rate of return (K_e) because new common stock has to A) compensate for risk. B) compensate for more dividends. C) compensate for expansionary problems. D) cover distribution costs.

Question

Quizplus · Accepted Answer

New common stock is more expensive because it includes distribution costs, which are not present in the required rate of return (K_e).

New Common Stock Is More Expensive Than Required Rate of Return