An Advantage to Using the SML Approach for Calculating the Cost

question 264

True/False

An advantage to using the SML approach for calculating the cost of equity it that this approach explicitly accounts for risk.

---

Definitions:

Buy Signal(s)

Indications or signals used by investors to suggest the optimal time to purchase a stock or investment.

Behavioral Concept

A concept in finance that incorporates psychological theories into conventional economic theory to explain unusual market phenomena.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Resistance-Level

A price level at which a stock or market consistently fails to rise above, often signaling a possible sell-off.