Which of the Following Is NOT Correct

question 125

Multiple Choice

Which of the following is NOT correct?

• A) The cost of equity is the return that equity investors require on their investment in the firm.
• B) The cost of equity can be found by either the dividend growth approach or the SML approach.
• C) The cost of debt is the return that lenders require on the firm's debt.
• D) If the firm has preferred stock in its capital structure, the cost of preferred stock should be included in the cost of capital.
• E) Book value capital structure weights should be used to calculate the WACC rather than market value weights.

Understand the significance of correct discount rates in NPV calculations and the impact of risk adjustment.

Grasp the methodology of assigning value to real options and its implications in project evaluation.

Calculate the risk-adjusted NPV of projects using appropriate discount rates and compare different project outcomes.

Understand and explain the certainty equivalent approach and its application in capital budgeting.

---

Definitions:

Fa'afafines

A recognized gender identity in Samoan culture that is traditionally characterized by individuals who are assigned male at birth but embody both masculine and feminine gender traits.

Bakla

A term from the Philippines denoting a male who has adopted a feminine gender expression, often considered a distinct gender identity within Filipino culture.

Standards

Established norms or criteria used as reference points for quality, performance, or compliance in various fields.

Behavior

The way in which one acts or conducts oneself, especially towards others.