For a Corporate Charter to Be Obtained

question 33

Multiple Choice

For a corporate charter to be obtained,

• A) one or more persons must apply to the secretary of state for permission to incorporate.
• B) the owner(s) must agree to be interviewed by a state department official.
• C) the owner(s) must negotiate an incorporation fee.
• D) the partners involved must outline a division of assets.

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Definitions:

SML Approach

The Security Market Line approach, a concept in finance that describes the risk vs. return relationship for individual securities, based on the capital asset pricing model (CAPM).

Firm's Beta

A measure of a stock's volatility in comparison to the market as a whole, indicating its riskiness.

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate for the risk they undertake by investing their capital.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital weighted by each category of capital, including equity and debt, reflective of the risk and cost of each type of financing.