Public Policy

question 4

Multiple Choice

Public policy:

• A) can be precisely defined
• B) is frequently used by the courts as a reason to invalidate contracts
• C) is protections from that which violates any established interest of society
• D) all of the above

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Definitions:

CAPM

The Capital Asset Pricing Model, an investment theory that shows the relationship between the expected return of an investment and market risk.

Cost of Equity

The cost of equity represents the return a firm is expected to pay to its shareholders to compensate them for their investment risk.

DCF Model

DCF Model, or Discounted Cash Flow Model, is a valuation method used to estimate the value of an investment based on its expected future cash flows.

Risk Premium

The extra return expected by investors for taking on additional risk above the risk-free rate.