Business, 04.11.2019 21:31 lmh40

Which of the following statements is correct? a. if the calculated beta underestimates the firm's true investment risk⎯i. e., if the forward-looking beta that investors think exists exceeds the historical beta⎯then the capm method based on the historical beta will produce an estimate of rs and thus wacc that is too high. b. beta measures market risk, which is, theoretically, the most relevant risk measure for a publicly-owned firm that seeks to maximize its intrinsic value. this is true even if not all of the firm's stockholders are well diversified. c. an advantage shared by both the dividend growth model and capm methods when they are used to estimate the cost of equity is that they are both "objective" as opposed to "subjective," hence little or no judgment is required. d. the specific risk premium used in the capm is the same as the risk premium used in the bond-yield-plus-risk-premium approach. e. the discounted cash flow method of estimating the cost of equity cannot be used unless the growth rate, g, is expected to be constant forever.

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 06:10

P11.2a (lo 2, 4) fechter corporation had the following stockholders’ equity accounts on january 1, 2020: common stock ($5 par) $500,000, paid-in capital in excess of par—common stock $200,000, and retained earnings $100,000. in 2020, the company had the following treasury stock transactions. journalize and post treasury stock transactions, and prepare stockholders’ equity section. mar. 1 purchased 5,000 shares at $8 per share. june 1 sold 1,000 shares at $12 per share. sept. 1 sold 2,000 shares at $10 per share. dec. 1 sold 1,000 shares at $7 per share. fechter corporation uses the cost method of accounting for treasury stock. in 2020, the company reported net income of $30,000. instructions a. journalize the treasury stock transactions, and prepare the closing entry at december 31, 2020, for net income. b. open accounts for (1) paid-in capital from treasury stock, (2) treasury stock, and (3) retained earnings. (post to t-accounts.) c. prepare the stockholders’ equity section for fechter corporation at december 31, 2020.

Answers: 1

Answer

Business, 22.06.2019 20:00

After testing its water, a city water department issues a report to the related citizens, noting what chemicals have been identified, their doses, and the estimated risks of exposure at these levels. this report represents a type of

Answers: 1

Answer

Business, 22.06.2019 20:30

Casey communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. this action had no effect on the company's total assets or operating income. which of the following effects would occur as a result of this action? a. the company's current ratio increased.b. the company's times interest earned ratio decreased.c. the company's basic earning power ratio increased.d. the company's equity multiplier increased.e. the company's debt ratio increased.

Answers: 3

Answer

Business, 22.06.2019 22:30

Which of the following describes one of the ways that the demographics of an area affect the price of housing in that area? a. when more people have children, their incomes tend to be higher and the housing prices are also higher. b. older people are more likely to stay in their houses, creating a seller's market that keeps prices low. c. an area with a lower population density won't have enough construction workers to build new houses quickly. d. an area with younger people will have a higher demand for rentals and a lower demand for buying.

Answers: 1

Answer

You know the right answer?

Which of the following statements is correct? a. if the calculated beta underestimates the firm's tr...

Questions