To Estimate the Cost of Equity Capital for a Firm

question 24

Multiple Choice

To estimate the cost of equity capital for a firm using APT or CAPM, it is necessary to have:

• A) company financial leverage, beta, and the market risk premium.
• B) company financial leverage, beta, and the risk-free rate.
• C) beta, company financial leverage, and the industry beta.
• D) beta, company financial leverage, and the market risk premium.
• E) beta, the risk-free rate, and the market risk premium.

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Definitions:

Scientific Management

A management theory that analyzes and synthesizes workflows, aiming to improve economic efficiency, especially labor productivity.

Specialized Tasks

Activities that require specific skills or expertise to be accomplished effectively.

Human Relations

The study and management of how people interact in the workplace, aiming to improve job satisfaction, productivity, and interpersonal dynamics.

Organizational Culture

Refers to the shared values, beliefs, attitudes, and practices that characterize an institution or corporation, shaping its environment.