An Advantage to Using the SML Approach for Calculating the Cost

question 109

True/False

An advantage to using the SML approach for calculating the cost of equity it that this approach applies only to companies that pay dividends

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.

Coupon Interest Rate

Yearly rate of interest on a bond, denoted as a percentage of its principal value.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, encompassing all interest payments and the repayment of principal.

Par Value

The face value of a bond, or the stock value stated in the corporate charter, often used as the basis for accounting of the bond or stock.