When We Compute the Cost of Equity Capital for a Project

question 96

Multiple Choice

When we compute the cost of equity capital for a project we assume that the ________ of the project is equivalent to the average market risk of the firm's investments.

• A) diversifiable risk
• B) market risk
• C) unsystematic risk
• D) volatility

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Definitions:

Conformity

The act of aligning one's beliefs, attitudes, and behaviors with societal norms or group standards.

Mass Media

Channels of communication such as television, radio, newspapers, and the internet, used to disseminate information or entertainment to a large audience.

Deviance

Behavior that violates the norms or expectations of a social group or society, which can lead to negative sanctions.

Ownership

The legal right or state of having control over something, such as property, businesses, or intellectual property.