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 4 of 6

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Q31.
The bond yield is 12% and the bond risk premium is 4.5% then the cost of common stock would be
Discuss
Answer: (c).0.155
Q32.
The forecast by analysts, retention growth model and historical growth rates are the methods used for an
Discuss
Answer: (a).estimate future growth
Q33.
The premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called
Discuss
Answer: (a).current risk premium
Q34.
An interest rate which is paid by the firm as soon as it issues the debt is classified as pre-tax
Discuss
Answer: (d).cost of debt
Q35.
The beta which is estimated as regression slope coefficient is classified as
Discuss
Answer: (a).historical beta
Q36.
In weighted average cost of capital, the capital components are the funds that are usually offered by
Discuss
Answer: (b).investors
Q37.
The cost which is used to calculate weighted average cost of capital is classified as
Discuss
Answer: (b).component cost of preferred stock
Q38.
The special situation in which large projects are financed by with and securities claims on project's cash flow is classified as
Discuss
Answer: (b).project financing
Q39.
The type of cost which is used to raise common equity by reinvesting internal earnings is classified as
Discuss
Answer: (b).cost of common equity
Q40.
If the future return on common stock is 19% and the rate on T-bonds is 11% then the current market risk premium will be
Discuss
Answer: (c).0.08
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