The Cost of Capital Is ____

question 95

Multiple Choice

The cost of capital is ____.

• A) the rate of return required by investors in the firm's securities
• B) the minimum rate of return required on new investments of high risk undertaken by the firm
• C) approximately 10 percent for most firms
• D) concerned with plant and equipment only

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Definitions:

Market Beta

measures the volatility of an investment or portfolio relative to the overall market, indicating its sensitivity to market movements.

Treasury Bills

Short-term government securities issued at a discount from their face value, with maturities typically less than a year.

Unsystematic Risk

The risk associated with a particular company or industry, also known as idiosyncratic risk or specific risk.

Retail Industry

The sector of the economy that sells consumer goods directly to customers.