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The weighted average cost of capital is used as a discount rate because
A. it is an indication of how much the firm is earning overall.
B. as long as the cost of capital is earned, the common stock value of the firm will be maintained.
C. it is comparable to the prevailing market interest rates.
D. returns below the cost of capital will cover all fixed costs associated with capital and provide an excess return to stockholders.
Please justify answer with explanation.
If you randomly select stocks and add them to your portfolio, which of the following statements best describes what you should expect?
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