The Difficulty in Using the CAPM for Determining the Cost

question 80

Multiple Choice

The difficulty in using the CAPM for determining the cost of equity lies in:

• A)The estimation of the firm's beta
• B)The estimation of the risk-free rate
• C)The estimation of the return on the market
• D)All of these

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Definitions:

Franchisor

A business entity that grants the right to use its brand, products, and operational model to an individual or company (franchisee) in exchange for a fee.

Entrepreneurship

The act of creating, managing, and running a business venture in order to earn profit by taking various risks in the corporate world.

Startup

A new business venture in its early stages, typically characterized by innovation, fast growth, and a scalable business model.

Corporate Entrepreneurship

A process of creating new products, ventures, processes, or renewal within large organizations.