Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) The cost of capital used to evaluate a project should be the cost of the specific type of financing used to fund that project.
• B) The cost of debt used to calculate the weighted average cost of capital is based on an average of the cost of debt already issued by the firm and the cost of new debt.
• C) One problem with the CAPM approach to estimating the cost of equity capital is that if a firm's stockholders are,in fact,not well diversified,beta might be a poor measure of the firm's true investment risk.
• D) The bond-yield-plus-risk-premium approach is the most sophisticated and objective method of estimating a firm's cost of equity capital.
• E) The cost of equity capital is generally easier to measure than the cost of debt,which varies daily with interest rates,or the cost of preferred stock that is issued infrequently.

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, largely fueled by international trade and investment and aided by information technology.

Blue-Collar Workers

Employees who perform manual labor, often in industries like manufacturing, construction, and maintenance, typically requiring physical work.

Overseas Workers

are individuals who are employed in a country other than their native country, often sending remittances back to their families in their home countries.

Resource Mobilization

The process of securing and managing resources (financial, human, informational, and other) for the purpose of achieving specific goals and objectives, often used in the context of social movements and nonprofit organizations.