Multiple Choice
Which of the following causes a firm's cost of capital (WACC) to differ from an investor's required rate of return on the company's common stock?
A) the fact that the risk-free rate of interest has increased
B) the incurrence of flotation costs when new securities are issued
C) The market risk premium exceeds 12%.
D) None of the above - the WACC and required return are the same.
Correct Answer:
Verified
Correct Answer:
Verified
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