The Cost of Equity Will Generally Increase for Risky Firms

question 85

True/False

The cost of equity will generally increase for risky firms when the risk-free rate of return increases.

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Definitions:

Asset

An item of value owned by an individual or corporation, expected to provide future benefits or value.

Stockholders' Equity

Stockholders' Equity represents the ownership interest of shareholders in the net assets of a company, calculated as the difference between total assets and total liabilities.

Revenues

Revenues represent the income earned by a business from its normal operations, such as sales of goods or services, before any expenses are deducted.

Assets

Resources owned or controlled by a business, expected to bring future economic benefits.