The Cost of Equity Capital Is

question 80

Multiple Choice

The cost of equity capital is

• A)the expected return on the firm's stock that investors require.
• B)frequently estimated by using the Capital Asset Pricing Model (CAPM).
• C)generally considered to be a linear function of the systematic risk inherent in the security.
• D)all of the above

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Definitions:

Revenue

Income derived from the core business activities of a company, specifically through selling products or services.

Net Income

The residual financial benefit a company holds after reducing total income by all expenditures and tax payments.

Owner's Drawings Account

An account that tracks the funds withdrawn by the owner from the company for personal use.

Closing Entry

Journal entries used to transfer temporary account balances to permanent accounts and to reset the balances of temporary accounts to zero at the end of each accounting period.