The Cost of Each Type of Capital Depends on the

question 2

Multiple Choice

The cost of each type of capital depends on the

• A) financial risk of the firm.
• B) risk-free cost of that type of funds.
• C) business risk of the firm.
• D) all of the above.

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Definitions:

Income Yield

The annual income from an investment divided by the current price of the investment, often expressed as a percentage, indicating the return from dividend payments or interest.

Rental Property

Real estate that is leased or rented out to tenants.

Property Taxes

Taxes assessed by local governments on properties, typically based on property value, to fund various public expenses.

Compounded Quarterly

Interest calculation method where interest is added to the principal four times a year, resulting in interest earned on previously earned interest.