Which of the following statements is most correct? (Points : 6) The CAPM approac

Question

Which of the following statements is most correct? (Points : 6) The CAPM approach to estimating a firm's cost of common stock never gives a better estimate than the DCF application. The CAPM approach is typically used to estimate a firm's cost of preferred stock. The risk premium used in the bond yield plus risk premium method is the same as the one used in the CAPM method. In practice (as opposed to in theory), the DCF method and the CAPM method usually produce exactly the same estimate for rs. The statements above are all false.

Explanation / Answer

The statements above are all false.

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