The Text Identifies Three Methods for Estimating the Cost of Common

question 82

True/False

The text identifies three methods for estimating the cost of common stock from reinvested earnings (not newly issued stock): the CAPM method, the dividend growth method, and the bond-yield-plus-risk-premium method.However, only the dividend growth method is widely used in practice.

---

Definitions:

Direct Approach

A straightforward method of communication, where the main point is presented at the beginning.

Indirect Approach

A communication technique where the main point is not immediately presented, instead leading through auxiliary details or reasoning before revealing the primary message.

Bias

A tendency to hold prejudiced views or unfair favoritism toward something or someone.

Documents

Written or printed records that provide evidence or information.