Factors Tend to Be Specific to Certain Uses and Products

question 21

Multiple Choice

Factors tend to be specific to certain uses and products

• A) in capital-intensive industries.
• B) in labor-intensive industries.
• C) in the short run.
• D) in countries lacking fair labor laws.
• E) in countries lacking comparative advantage.

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Definitions:

Cost of Equity

The rate of return that a company is required to pay out to its equity investors, reflecting the compensation for the risk they undertake.

SML Approach

Security Market Line (SML) approach is a graphical representation in the Capital Asset Pricing Model (CAPM) that shows the expected return of an asset or portfolio at various levels of systemic risk.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionally weighted.

Perpetuity

An annuity in which the cash flows continue forever.