The Cost of Equity for a Firm

question 12

Multiple Choice

The cost of equity for a firm:

• A) tends to remain static for firms with increasing levels of risk.
• B) increases as the unsystematic risk of the firm increases.
• C) can be estimated from the capital asset pricing model or the dividend growth model.
• D) equals the risk-free rate plus the market risk premium.
• E) equals the firm's pre-tax weighted-average cost of capital.

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