1.The cost of capital is a.the rate of return required by investors in the firm\

Question

1.The cost of capital is
a.the rate of return required by investors in the firm's securities
b.the minimum rate of return required on new investments of high risk undertaken by the firm
c.approximately 10 percent for most firms
d. concerned with plant and equipment only


2.Small firms are reluctant to obtain capital through the sale of common stock because of:
a.potential loss of voting control
b.high issuance costs
c.high cost of debt
d.both the potential loss of voting control and the high issuance costs.

Explanation / Answer

1.The cost of capital is a.the rate of return required by investors in the firm's securities 2.Small firms are reluctant to obtain capital through the sale of common stock because of: d.both the potential loss of voting control and the high issuance costs.

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