Cost of Capital Is the Same as Cost of Equity

question 56

Multiple Choice

Cost of capital is the same as cost of equity for firms:

• A) financed entirely by debt
• B) financed by both debt and equity
• C) financed entirely by equity
• D) none of the above

---

Definitions:

Other Comprehensive Income

Earnings that are not part of net income, consisting of items such as unrealized gains and losses on certain investments.

Retained Earnings

The portion of net income that is retained by the corporation instead of being paid out as dividends to shareholders.

Earnings Management

The practice of using accounting techniques to produce financial reports that may paint an overly positive picture of a company's business activities and financial position.

Investment Account

A financial account held at a financial institution that contains securities, cash, and other assets managed for the purpose of achieving an investment goal.