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decrease in the risk-free rate will reduce?

decrease in the risk-free rate will reduce?

A. the market risk preumium

B. The stock's risk premium

C. the stock's beta

D. The stock's expected return


if a company's weighted average cost of capital is equal to the required return on equity, then the firm (assuming no preferred stock financing): 

A. is financed with more than 50% debt

B. cannot be using any debt

C. is percieved to be safe. 

D. is at least partly financed with debt. 


Which of the following projects would be best to accept? Assume opportunity cost of capital to be 12% for each project.

A. Project A has a small, but negative, NPV

B. Project B has a positive NPV, but only if the dissent rate is reduced below 12%

C. Project C;s cost of capital exceeds its rate of return

D. Project D has a zero NPV when discounted at 14%

Top Answer

1. D. The stock's expected return 2.C. is... View the full answer

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