Which of the Following Statements Regarding the Determination of the Weighted-Average

question 63

Multiple Choice

Which of the following statements regarding the determination of the weighted-average cost of capital is not true:

• A)The capital asset pricing model (CAPM)cannot be used to estimate the cost of debt for a company.
• B)The capital asset pricing model (CAPM)can be used to estimate the cost of equity for a non-public company.
• C)In estimating the cost of debt,the analyst typically estimates the current yield-to-maturity of the debt instruments in the company's capital structure.
• D)Market,not book,values of the components of capital are preferable in terms of determining weights for the weighted-average calculation.

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Definitions:

Probability Sampling

A sampling technique in which every member of the population has a known, non-zero chance of being selected.

Broader Population

Refers to a larger or more general group of individuals from which samples may be drawn for research or statistical analysis.

Random Number Generator

A tool or algorithm used to produce a sequence of numbers that lacks any predictable pattern, often used in statistical sampling, computer simulations, and cryptography.

Volunteer Sampling

The selection of research participants from a pool of individuals who have expressed a willingness to participate, which may not fully represent the population.