There Are Three Components in the Rate of Return Used

question 108

Multiple Choice

There are three components in the rate of return used to value a business.The component(s) are:

• A)risk-free return.
• B)an inflation premium.
• C)the risk allowance for investing in the particular business.
• D)All of the above

---

Definitions:

Common Stock

A type of corporate equity security that represents a share of ownership in a corporation, conferring voting rights and a portion of the profits (dividends).

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing shareholders' equity.

Stockholders' Equity

The ownership interest of shareholders in a company, calculated as the company's total assets minus its total liabilities.