The ASX's Share Price Indices Are

question 7

Multiple Choice

The ASX's share price indices are:

• A)the sum of the share prices of the constituent companies
• B)weighted by share turnover
• C)weighted by market capitalisation
• D)the sum of the share prices of the constituent companies divided by the number of shares
• E)all accumulation indices.

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Definitions:

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk of investing in the stock.

Marginal Cost of Capital

The cost of obtaining an additional dollar of new capital, which increases as more capital is raised due to increasing risk and/or decreasing attractiveness to investors.

Investment Opportunity Schedule

A graph or listing that shows the relationship between the rates of return on investment and the amount of investment.

MCC

Marginal Cost of Capital is an economic term representing the cost of obtaining one additional unit of capital.