The___________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions.
A) risk premium
B) nominal cost
C) risk-free rate
D) cost of capital

Question

The___________ is a weighted average of the cost of funds which reflects the interrelationship of  financing decisions.
A) risk premium
B) nominal cost
C) risk-free rate
D) cost of capital

Quizplus · Accepted Answer

The cost of capital is the best choice as it represents the total cost incurred by a company for raising funds. It includes the cost of both debt and equity and takes into account the risk involved in the financing decisions. The risk premium, nominal cost, and risk-free rate are all factors that contribute to calculating the cost of capital but are not standalone choices for financing decisions.

The___________ Is a Weighted Average of the Cost of Funds