Which of the Following Is the Rate of Return That

question 91

Multiple Choice

Which of the following is the rate of return that must be earned on preference shareholders' investment in order to satisfy their required rate of return?

• A)Cost of debt
• B)Cost of preference shares
• C)Risk of premium
• D)Divisional WACC

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thereby possessing certain rights and responsibilities.

Charter

A legal document that establishes a corporation or city, outlining its rights, privileges, and purposes.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.

Authorization

The official permission or power to do something, often formally granted by a higher authority.