Multiple Choice
As per the Bond-Yield-Plus-Risk-Premium Approach, analysts estimate the cost of common equity by adding a risk premium of 3 to 5 percentage points to:
A) the cost of preferred stock of the firm.
B) the risk free rate of the common equity of the firm.
C) the interest rate on the long term debt of the firm.
D) the return on the firm's investment in municipal bonds.
E) the growth rate of the firm.
Correct Answer:
Verified
Correct Answer:
Verified
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