Which of the following is an assumption in applying the capital asset pricing model (CAPM) to estimate the cost of equity capital??
A. ?The investors are well diversified.
B. ?The firm's dividends and earnings grow at a constant rate far into the future.
C. ?The cost of equity and the cost of debt of a firm are always equal.
D. ?The cost of retained earnings is lower than the cost of preferred stock due to the tax savings on earnings retained.
E. ?The investors always prefer to receive lower return on retained earnings than regular dividend payments.
Answer: A
You might also like to view...
Answer the following statements true (T) or false (F)
1. When job boundaries are ambiguous, employees are less possessive, and conflict is likely to be minimized. 2. Avoiding it is never an appropriate response to conflict. 3. The weakness of accommodating as a method for handling conflict is that it is only a temporary fix that fails to address the underlying problem. 4. The conflict-handling style of compromising is appropriate when both parties to a conflict have equal power.
Which of the following is one of the three lines of organizational power?
A. lines of supply B. lines of command C. lines of reference D. lines of personal power
Knowledge work can best be defined as jobs that primarily
A. concern scientific or technical activities. B. are occupied by Ivy League graduates. C. require a graduate-level degree. D. involve cognitive activity as opposed to physical activity. E. demand upper-level problem-solving skills.
Activity in money markets increased significantly in the late 1970s and early 1980s because of
A) rising short-term interest rates. B) regulations that limited what banks could pay for deposits. C) both A and B of the above. D) neither A nor B of the above.