The Cost of Capital

question 23

Multiple Choice

The cost of capital:

• A) is the expected rate of return on 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:

Occipital Bone

The bone that forms the back and base of the skull, surrounding and protecting the occipital lobe of the brain.

Nasal Bone

One of the paired bones that lie in the upper part of the human nose, forming the bridge of the nose.

Perichondrium

Double-layered connective tissue sheath surrounding cartilage.

Connective Tissue

A type of body tissue that supports, binds together, and protects the organs and other tissues of the body.