The Normal Rate of Return on Equity Capital Is Also

question 177

Multiple Choice

The normal rate of return on equity capital is also known as

• A) the explicit cost of capital.
• B) the marginal cost of capital.
• C) economic profit.
• D) the opportunity cost of capital.

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Definitions:

Limited Liability

A legal structure that limits the personal financial responsibility of owners for the debts and actions of a business.

Corporation

A legal entity distinct from its owners, offering limited liability to its shareholders, and capable of owning assets, incurring debt, and conducting business.

Partnership

A formally established business entity where two or more counterparts participate in managing the firm and splitting the profits.

Proprietorship

A form of business organization where a single individual owns and operates the business.