Which of the Following Statements Is Correct

question 97

Multiple Choice

Which of the following statements is correct?

• A) Although some methods of estimating the cost of capital encounter severe difficulties,the CAPM is a simple and reliable model that provides great accuracy and consistency in estimating the cost of capital.
• B) The DCF model is preferred over other models to estimate the cost of equity because of the ease with which a firm's growth rate is obtained.
• C) The bond-yield-plus-risk-premium approach to estimating the cost of equity is not always accurate but its advantages are that it is a standardized and objective model.
• D) The tax savings associated with depreciation are an additional source of capital and,in fact,represent the largest single source of funds for some firms.
• E) None of the above is a correct statement.

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Definitions:

Neuroticism

Refers to a dimension of personality associated with the experience of negative emotions and emotional reactivity.

Agreeableness

A personality trait that reflects a person's tendency to be compassionate, cooperative, and friendly towards others.

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of life, not limited to just one specific issue.

Nervous

Characterized by or experiencing a state of unease, anxiety, or apprehension.