Which of the Following Are Implicit Costs for a Typical

question 102

Multiple Choice

Which of the following are implicit costs for a typical firm?

• A)Insurance costs.
• B)Electricity costs.
• C)Opportunity costs of capital owned and used by the firm.
• D)Cost of labour hired by the firm.
• E)The cost of raw materials.

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Definitions:

Preferred Stock

A class of stock that typically has a priority claim on dividends and assets in the event of liquidation over common stock.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment’s cost.

Cost of Debt

The effective rate that a company pays on its current debt, including loans and bonds, which can be measured before or after taxes.

Annual Coupon

The annual interest payment made to bondholders, expressed as a percentage of the bond's face value.