A CFO Will Underestimate His Firm's Cost of Capital If

question 11

Multiple Choice

A CFO will underestimate his firm's cost of capital if he

• A)overestimates the personal tax rates faced by the firm's investors.
• B)underestimates transaction costs.
• C)ignores the implications of excess free cash flow.
• D)both B and C.

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Definitions:

Salary.com

A website and tool that provides information on job salaries, benefits, and compensation-related data and advice.

Job-Seeking Activities

Activities undertaken by individuals to find new employment opportunities, including networking, resume submission, and interviewing.

Web Surfing

The activity of browsing the internet by moving from one website to another, usually in an informal or recreational manner.

Citizenship Behavior

Voluntary actions by employees that contribute to the organization's well-being but are not explicitly recognized by the formal reward system.