Assumption in applying the capital asset pricing model

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1. The cost of issuing preferred stock by a corporation must be adjusted to an after-tax figure because of the 70 percent dividend exclusion provision for corporations holding other corporations' preferred stock.

2. Which of the following is an assumption in applying the capital asset pricing model (CAPM) to estimate the cost of equity capital?

3. Alpha Inc. combines the marginal cost of capital (MCC) and the investment opportunity schedules (IOS) on a graph. Which of the following areas on the graph shows the maximum excess of returns over costs?

Reference no: EM132064367

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