The weighted average cost of capital for firm

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Reference no: EM131327158

Financial analysts value items in terms of their:

tax benefits.

useful life.

market value.

depreciated value.

original cost.

The weighted average cost of capital for a firm is the:

overall rate which the firm must earn on its existing assets to maintain the value of its stock.

rate the firm should expect to pay on its next bond issue.

maximum rate which the firm should require on any projects it undertakes.

rate of return that the firm's preferred stockholders should expect to earn over the long term.

discount rate which the firm should apply to all of the projects it undertakes.

Assume each firm within an industry has similar operations and financial structures as the industry as a whole. Which one of these statements related to beta is correct given this assumption?

Firms should use their own betas rather than the industry beta.

All firms in the industry will have the same beta.

Betas should be computed on an annual basis.

The error in beta estimation for a single security exceeds the error for a portfolio of securities.

Industry betas are less reliable than firm betas.

Reference no: EM131327158

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