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 2 of 6

Q11.
The retention ratio is 0.60 and the return on equity is 15.5% then the growth retention model would be
Discuss
Answer: (d).0.093
Q12.
The method uses for an estimation of cost of equity is classified as
Discuss
Answer: (c).discounted cash flow method
Q13.
An attempt to make correction by adjusting historical beta to make it closer to an average beta is classified as
Discuss
Answer: (b).adjusted beta
Q14.
The method in which company finds other companies considered in same line of business to evaluate divisions is classified as
Discuss
Answer: (a).pure play method
Q15.
The bond risk premium is added in to bond yield to calculate
Discuss
Answer: (c).cost of common stock
Q16.
The stock selling price is $45, an expected dividend is $10 and an expected growth rate is 8% then cost of common stock would be
Discuss
Answer: (d).0.3022
Q17.
A type of beta which incorporates about company such as changes in capital structure is classified as
Discuss
Answer: (d).fundamental beta
Q18.
The dividend per share is $18 and sell it for $122 and floatation cost is $4 then the component cost of preferred stock will be
Discuss
Answer: (a).0.1525
Q19.
In weighted average capital, the capital structure weights estimation does not rely on the value of
Discuss
Answer: (c).book value of equity
Q20.
The interest rates, tax rates and market risk premium are the factors which an/a
Discuss
Answer: (d).firm cannot control
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