The most expensive source of capital is usually

Question

Quizplus · Accepted Answer

New ordinary shares are the most expensive source of capital because they require a higher cost of capital compared to debt or retained earnings. This is because shareholders require a higher rate of return on their investment due to the higher risk involved in equity investments. Preference shares may also be expensive, but they usually have a lower cost of capital than new ordinary shares due to their fixed dividend payments. Debt and retained earnings typically have lower costs of capital because they are considered less risky than equity investments.

The Most Expensive Source of Capital Is Usually