Which One of the Following Represents the Minimum Rate of Return

question 34

Multiple Choice

Which one of the following represents the minimum rate of return a firm must earn on its assets if it is to maintain the current value of its securities?

• A)Cost of equity
• B)Pretax cost of debt
• C)Aftertax cost of debt
• D)Weighted average cost of capital
• E)Weighted average cost of preferred and common stock

Understand the relationship between economic profits, average total cost, and market prices in determining firm behavior in the long run.

Predict market adjustments in response to changes in cost and demand in both short and long run.

Understand the characteristics and symptoms of generalized anxiety disorder (GAD).

Identify different types of anxiety disorders and distinguish them from one another.

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Definitions:

Weighted Average Cost Of Capital

The average rate of return a company is expected to pay to its security holders, weighted by the proportion of each type of capital in the overall capital structure.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit.

Return On Investment

A measure used to evaluate the efficiency of an investment, calculated as net profit divided by the cost of the investment.

Capital Turnover

A ratio that shows how efficiently a company uses its capital assets to generate sales revenue.