The cost of equity for a firm is:
A) determined by directly observing the rate of return required by equity investors.
B) based on estimates derived from financial models.
C) equivalent to a leveraged firm's cost of capital.
D) equal to the risk-free rate of return plus the market risk premium.
E) equal to the risk-free rate of return plus the dividend growth rate.
B
You might also like to view...
Suppose that a change in the expected inflation rate leads supply and demand to adjust so that the after-tax expected real interest rate is unchanged at 2.0 percent. The tax rate is 30 percent. Initially, the expected inflation rate is 3.0 percent. If the expected inflation rate falls from 6 percent to 0 percent, the expected real interest rate
A. rises by 1.25 percent. B. rises by 2.5 percent. C. falls by 2.5 percent. D. falls by 1.25 percent.
Encryption slows down communication because the software must encrypt and decrypt every message.
Answer the following statement true (T) or false (F)
Ratio of cash to monthly cash expenses is calculated as ________
a. Cash as of Year End / Monthly Cash Expenses b. Cash as of Year End / 12 c. Negative Cash Flow from Operations / Monthly Cash Expenses d. Negative Cash Flow from Operations / 12
Maggie's Apparel Inc. is a store that offers customized shopping, whereby consultants pick clothing they feel will fit a customer's style and specified need. This scenario most likely illustrates _____
a. personal selling b. price-based selling c. seasonal marketing d. word-of-mouth marketing