The Cost of Common Stock Equity May Be Estimated by Using

question 136

Multiple Choice

The cost of common stock equity may be estimated by using the

• A) yield curve.
• B) capital asset pricing model.
• C) internal rate of return.
• D) DuPont analysis.

---

Definitions:

Perfect Competition

A market structure where many companies sell products that are identical to each other and no single firm can influence the market price.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on costs but on what the seller believes each customer can afford or is willing to pay.

Single-Price Monopoly

A market structure where a single seller sells a unique product in the market and does not charge different prices to different consumers for the same product.

Monopolist's Profits

The excess earnings a monopolist achieves by being the sole provider of a product or service, which allows for pricing above marginal cost.