1 The investor\'s required rate of return differs from the firm\'s cost of capit

Question

1 The investor's required rate of return differs from the firm's cost of capital due to the:
Answer

A firm's beta.

B CAPM.

C tax deductibility of interest.

D time value of money.


2 The weights used to determine the relative importance of the firm's sources of capital should reflect:
Answer

A subjective adjustments for firm risk.

B current market values.

C current market values for bonds, common stock, and preferred stock and book values for retained earnings.

D book values in accord with generally accepted accounting principles.

Explanation / Answer

1. C tax deductibility of interest. 2. B current market values. answer

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