To Estimate the Cost of Equity Capital for a Firm

question 12

Multiple Choice

To estimate the cost of equity capital for a firm using the 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:

Italian Fresco

A technique of mural painting executed upon freshly laid lime plaster, allowing pigments to merge with the plaster for permanence, notably used in Italy during the Renaissance.

English Gothic

An architectural style prevalent in England from the late 12th to the 16th century, characterized by pointed arches, ribbed vaults, and flying buttresses.

Wells Cathedral

A historical cathedral located in Wells, Somerset, England, famous for its impressive Gothic architecture and one of the most beautiful ecclesiastical buildings in the UK.

Ely Cathedral

A historic Anglican cathedral in Ely, Cambridgeshire, England, famed for its intricate Gothic architecture and the unique Octagon tower.