Which of the following causes a firm's cost of capital (WACC) to ...

[gbarreiro]

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

[diana chang]

Answer to Question 1

C

Answer to Question 2

B