The Rate of Return on Common Stockholders' Equity Shows the Relationship

question 19

True/False

The rate of return on common stockholders' equity shows the relationship between net income available to common stockholders and their average common equity invested in the company.

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Definitions:

Market Value

The current value at which the market facilitates the sale or purchase of a service or asset.

WACC

Weighted Average Cost of Capital; a calculation used to assess the cost of a company's financing by averaging the costs of its equity and debt, weighted by their respective proportions in the company's capital structure.

Level of Risk

Describes the amount of uncertainty or potential financial loss inherent in an investment decision.

WACC

The Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.