What Is the Theoretical Minimum for the Weighted Average Cost

question 8

Multiple Choice

What is the theoretical minimum for the weighted average cost of capital?

• A) The after-tax cost of debt
• B) The cost of preferred stock
• C) CAPM
• D) The cost of equity

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Definitions:

C.I.F. Contract

Stands for "Cost, Insurance, and Freight," a type of international shipping agreement where the seller pays for the cost of goods, insurance, and freight to a specified destination.

F.O.B. Contract

A shipping agreement where "Free On Board" determines that the seller delivers goods on board a vessel designated by the buyer, transferring the risk from the seller to the buyer once the goods are onboard.

C.O.D. Contract

Contract of "Cash On Delivery" where payment for goods is made at the time of delivery rather than in advance.

Privity of Contract

A legal concept that restricts the parties who can sue or be sued under a contract to those who are a part of the contract agreement.