Select all that applyShareholders bear the costs of selfish strategies through Blank______.Multiple select question.higher interest rates on bondshigher dividend yields on stockshigher flotation costsincreased difficulty in selling bonds to raise money
Question
Select all that applyShareholders bear the costs of selfish strategies through Blank______.Multiple select question.higher interest rates on bondshigher dividend yields on stockshigher flotation costsincreased difficulty in selling bonds to raise money
Solution
The costs of selfish strategies are usually borne by shareholders through:
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Higher flotation costs: Selfish strategies often lead to a lack of trust and confidence in the company. This can increase the costs associated with issuing new shares, known as flotation costs.
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Increased difficulty in selling bonds to raise money: If a company is known for implementing selfish strategies, it may be viewed as a risky investment. This can make it more difficult for the company to sell bonds to raise money, as potential investors may be wary of investing in such a company.
Higher interest rates on bonds and higher dividend yields on stocks are not typically direct results of selfish strategies. Interest rates on bonds are determined by the market and the perceived risk of the company, while dividend yields are a function of the company's profitability and dividend policy.
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