What preferences do you think common stock shareholders would have regarding a company's source of equity financing?© BrainMass Inc. brainmass.com October 16, 2018, 9:31 pm ad1c9bdddf
What preferences do you think common stock shareholders would have regarding a company's source of equity financing?
The preferences for raising the money from equity will be:
1) This will lead to increase in borrowing base which may ...
This explains the Preferences of equity financing
Default risk, inflation, and interest rate risk
Companies seek the lowest average rate of financing costs to capitalize the business. Common sources of financing are as follows:
- Common stock equity
- Preferred stock equity
- Bond debt
Explain how the following risks may affect these 3 sources of financing and the impact overall on weighted average cost of capital (WACC):
- Default risk
- Interest rate risk
- Stock and market volatility