The Discount Rate May Be Estimated Using All but the One

question 60

Multiple Choice

The discount rate may be estimated using all but the one of the following:

• A) The capital asset pricing model
• B) The share exchange ratio
• C) The cost of capital
• D) Return on total assets
• E) Price-to-earnings ratio

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

Factor Market

A marketplace for the services of a factor of production, such as labor, capital, or land, where these are bought and sold.

Marginal Productivity

Refers to the increase in output that arises from an additional unit of input, assuming all other factors of production remain constant.

Marginal Productivity Theory

An economic theory suggesting that payment to factors of production equates to their marginal contribution to the output.