Which Two of the Following Statements Best Apply to Views

question 29

Multiple Choice

Which two of the following statements best apply to views on the cost of capital?

• A) The shareholder wants to ensure that dividends exceed the return on other shares.
• B) The shareholder wants an expected return appropriate for the risk, when compared with other investments.
• C) The firm wants to know the cost, in terms of expected return, needed to induce purchase and retention of shares.
• D) The firm wants to ensure that the cost of return is sufficient to overcome variation in future costs.

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Definitions:

Theoretical Perspectives

Frameworks or approaches that provide explanation for behaviors, phenomena, or social structures.

Observable Facts

Information or data that can be seen, measured, or noted directly, without the need for inference.

Theories

General principles or ideas used to explain how certain aspects of the natural or social world operate.

Heuristics

Mental shortcuts or 'rules of thumb' that simplify decision making, often at the cost of accuracy or thoroughness.