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Basic Question 13 of 15

Financing comes from three sources, retained earnings, debt and new equity. Retained earnings have the lowest cost because of:

A. static trade-off between debt and equity
B. agency costs of equity
C. asymmetry information theory

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Lina

Lina

Learning Outcome Statements

describe optimal and target capital structures

CFA® 2024 Level I Curriculum, Volume 2, Module 6.