Cost of Capital MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Cost of Capital, a fundamental topic in the field of Financial Management and Financial Markets. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Cost of Capital MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Cost of Capital mcq questions that explore various aspects of Cost of Capital problems. Each MCQ is crafted to challenge your understanding of Cost of Capital principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace Financial Management and Financial Markets tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Cost of Capital MCQs are your pathway to success in mastering this essential Financial Management and Financial Markets topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Cost of Capital. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Cost of Capital knowledge to the test? Let's get started with our carefully curated MCQs!

Cost of Capital MCQs | Page 1 of 6

Q1.
During the planning period, a marginal cost for raising a new debt is classified as
Discuss
Answer: (b).relevant cost
Q2.
The cost of common stock is 14% and the bond risk premium is 9% then the bond yield will be
Discuss
Answer: (b).0.05
Q3.
In weighted average cost of capital, a company can affect its capital cost through
Discuss
Answer: (d).all of the above
Q4.
A risk associated with the project and the way considered by well diversified stockholder is classified as
Discuss
Answer: (b).beta risk
Q5.
The cost of common stock is 13% and the bond risk premium is 5% then the bond yield would be
Discuss
Answer: (c).0.08
Q6.
The variability for the expected returns for projects is classified as
Discuss
Answer: (b).stand-alone risk
Q7.
The cost of common stock is 16% and the bond yield is 9% then the bond risk premium would be
Discuss
Answer: (a).0.07
Q8.
If the future return on common stock is 14% and the rate on T-bonds is 5% then the current market risk premium will be
Discuss
Answer: (b).0.09
Q9.
The cost of capital is equal to required return rate on equity in the case if investors are only
Discuss
Answer: (b).common stockholders
Q10.
The interest rate is 12% and the tax savings (1-0.40) then the after-tax component cost of debt will be
Discuss
Answer: (a).0.072
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