Component cost of firm preferred stock consists

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Reference no: EM131825788

1. The component cost of a firm's preferred stock consists of:

a. the current dividend yield.

b. the expected growth rate of dividends.

c. dividends expressed as a percent of par value.

d. a and b

2. Which of the following statements is false?

a. Beta is meaningful only if an investor holds a well-diversified portfolio.

b. You can completely eliminate risk if you hold a well-diversified portfolio.

c. A portfolio composed of only one stock will not be well diversified.

d. A wise investor diversifies to capture the high average return of stocks while avoiding as much risk as possible.

e. All of the above statements are correct.

Reference no: EM131825788

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