The Cost of Equity for a Firm

question 13

Multiple Choice

The cost of equity for a firm:

• A)tends to remain static for firms with increasing levels of risk.
• B)increases as the unsystematic risk of the firm increases.
• C)ignores the firm's risks when that cost is based on the dividend growth model.
• D)equals the risk-free rate plus the market risk premium.
• E)equals the firm's pretax weighted average cost of capital.

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Definitions:

Strong Attack

An intense and aggressive action or argument aimed at defeating or undermining someone or something.

Common Belief

A widely held view or opinion that is accepted by a majority within a society.

Influenced

Being affected or altered in one's behavior, thoughts, or actions due to the effect of external forces or individuals.

Frightening Message

A type of communication intended to induce fear in order to influence behavior or attitudes.