All of the Following Methods Can Be Used to Estimate

Multiple Choice

All of the following methods can be used to estimate the cost of equity except:

A) Like debt and preferred stock, cash flows from common equity are fixed.
B) Firms have two sources of common equity, retained earnings and new stock issues, but only one single cost of common equity.
C) From the shareholders' perspective, the opportunity cost of retained earnings is the return the shareholders could earn by investing the funds in long-term treasury securities.
D) If the firm cannot invest its retained earnings to achieve a sufficient risk-adjusted return, shareholders would be better off receiving additional shares of stock.
E) None of the above statements are correct.
Clone of 2 prior items