Answer the following statements true (T) or false (F)
1. The cost of retained earnings is generally higher than both the cost of debt and cost of preferred stock.
2. One measure of the cost of common stock equity is the rate at which investors discount the expected common stock dividends of the firm to determine its share value.
3. The Gordon model is based on the premise that the value of a share of stock is equal to the sum of all future dividends it is expected to provide over an infinite time horizon.
4. Using the Capital Asset Pricing Model (CAPM), the cost of common stock equity is the return required by investors as compensation for a firm's nondiversifiable risk.
5. Use of the capital asset pricing model (CAPM) in measuring the cost of common stock equity differs from the constant-growth valuation model in that it directly considers the firm's risk as reflected by beta.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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What does the act of state doctrine assert?
What will be an ideal response?
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Answer the following statement true (T) or false (F)