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Author Question: Which of the following causes a firm's cost of capital (WACC) to differ from an investor's required ... (Read 87 times)

gbarreiro

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on: Jul 10, 2018
Which of the following causes a firm's cost of capital (WACC) to differ from an investor's required
  rate of return on the company's common stock?
 
  A) the fact that the risk-free rate of interest has increased
  B) The market risk premium exceeds 12.
  C) the incurrence of flotation costs when new securities are issued
  D) None of the above N the WACC and required return are the same.

Question 2

The external funds requirement results primarily from ________. (See Table 4.5)
 
  A) the payment of dividends
  B) the retirement of debt and purchase of new fixed assets
  C) low profit margin
  D) high cost of sales
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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diana chang

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Reply #1 on: Jul 10, 2018
Answer to Question 1

C

Answer to Question 2

B


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