Question 1
When using the bond yield plus risk premium approach to estimating the cost of equity, the equity risk premium is usually about
◦ 3-5%.
◦ 8-10%.
◦ 20-25%.
◦ 10-15%.
◦ 30-33%.
Question 2
Which component of a firm's capital structure is the most difficult to estimate?
◦ Preferred stock
◦ Equity
◦ Bank loans
◦ Bond-financed debt
◦ Private placements of debt