The cost of equity for a firm with a debt-equity ratio

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Reference no: EM13951765

The cost of equity for a firm with a debt-equity ratio of .35:

a) Increases as the unsystematic risk of the firm increases.

b) Tends to remain static for firms with increasing levels of risk.

c) Ignores the firm's risks when that cost is based on the dividend growth model.

d) Equals the risk-free rate plus the market risk premium.

e) Equals the firm's pretax weighted average cost of capital.

Reference no: EM13951765

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