The Cost of Capital

question 89

Multiple Choice

The cost of capital:

• A) is the expected rate of return on a capital investment.
• B) is an opportunity cost determined by the risk-free rate of return.
• C) is the interest rate that the firm pays on a loan from a bank or insurance company.
• D) for risky investments is normally higher than the firm's borrowing rate.

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Definitions:

Gestation Period

The time span from conception to birth in mammals, typically varying based on species.

Fetal

Pertaining to a fetus, which is a developing baby from the end of the eighth week after conception until birth.

Prenatal Development

The process of growth and development within the womb from conception to birth.

Longest Period

The most extended duration or time that something exists or continues in effect.