An Understanding of How the Company's Cost of Capital Is

question 53

Multiple Choice

An understanding of how the company's cost of capital is determined is one of the fundamental concepts that a nonfinancial manager should understand in order to:

• A)better assess the current environment in which the firm operates.
• B)better assess future financing requirements.
• C)better understand the role of capital markets in raising long-term funds.
• D)better measure and create value for the shareholders.

---

Definitions:

Enforceable

Refers to a contract or clause that is legally binding and can be upheld in court.

Job Loss

The instance of losing one's employment, often due to layoffs, company closure, or termination.

Verbal Promise

An agreement or commitment made orally rather than in written form; its enforceability varies depending on the nature of the agreement and the context under law.

Executor

A person or institution appointed by a testator to carry out the terms of their will.