Which of the Following Statements Is Correct

question 47

Multiple Choice

Which of the following statements is correct?

• A)Beta measures market risk, but if a firm's stockholders are not well diversified, beta may not accurately measure the firm's total risk.
• B)If the calculated beta underestimates the firm's true investment risk, then the CAPM method will overestimate rs.
• C)The discounted cash flow method of estimating the cost of equity can't be used unless the growth component, g, is constant during the analysis period.
• D)An advantage shared by both the DCF and CAPM methods of estimating the cost of equity capital, is that they yield precise estimates and require little or no judgment.
• E)None of the above is a correct statement.

---

Definitions:

Self-defeating Humor

A type of humor in which individuals make themselves the target of jokes, potentially lowering their own self-esteem for the sake of laughter.

Affiliative

Referring to behaviors that promote social connection, such as cooperation and building relationships.

Self-enhancing

Involves behaviors or thoughts that serve to maintain or increase an individual's self-esteem or positive self-view.

Aggressive

Pertaining to behavior or attitudes that demonstrate hostility or the intent to confront others.