Which of the Following Is the Reason Why an Internally

Multiple Choice

Which of the following is the reason why an internally financed company selling its products at a lower price can earn more profit than a competitor who is operating on borrowed money?

A) Investors are more likely to purchase a company's stock if it is internally financed.
B) It is less expensive since no interest expense is involved.
C) The value of stock of an internally financed company is easier to predict.
D) Market forecast is more difficult if a company is operating on borrowed money.
E) Commercial banks do not allow a company to borrow money unless it can provide collateral security.