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Which financing source is favoured by a desire to retain control?

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Question

Which financing source is favoured by a desire to retain control?

Options

  • A fresh issue of equity

  • Higher floatation costs

  • Debt financing

  • Compulsory dividends

MCQ
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Solution

Issuing new equity may dilute the ownership and control of existing shareholders. A desire to retain control therefore favours debt financing.

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