To Estimate the Cost of Equity Capital for a Firm

question 12

Multiple Choice

To estimate the cost of equity capital for a firm using the CAPM,it is necessary to have:

• A) company financial leverage, beta, and the market risk premium.
• B) company financial leverage, beta, and the risk-free rate.
• C) beta, company financial leverage, and the industry beta.
• D) beta, company financial leverage, and the market risk premium.
• E) beta, the risk-free rate, and the market risk premium.

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Definitions:

Customer Retention

The activities and actions companies and organizations take to reduce the number of customer defections and to maintain a loyal customer base.

Customer Satisfaction

An assessment of the degree to which a company's products or services exceed or fulfill the anticipations of the consumer.

Financial Value

The monetary worth or importance of an asset, investment, or transaction determined through market dynamics or financial assessment.

Customer Retention

The strategies and actions companies take to prevent customers from switching to a competitor and to encourage repeated business.