The cost of capital to a firm is equal to
A) a risk-free rate plus an equity premium.
B) a risk-free interest rate.
C) an equity premium charged by lenders.
D) the Treasury bill rate minus an equity premium.
A
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Investments that a bank makes are known as:
A) deposits. B) liabilities. C) assets. D) capital.
When consumers realize additional income in a household and spend the additional money, the portion of the additional income that is spent is measured by the:
A. credit increase theory. B. marginal propensity to consume. C. aggregate demand factor. D. measure of individual wealth.
The income effect of an inferior good is negative.
a. true b. false
If the price of airline travel in Mexico falls, and the demand for train travel in Mexico also falls, then the two goods are
A. normal goods. B. inferior goods. C. substitutes. D. complements.