The cost of common stock equity is the rate at which investors discount the expected dividends of the firm to determine its share value.

Question

Quizplus · Accepted Answer

This statement is true. The cost of common stock equity is the rate of return required by investors to compensate for the risk they are taking by investing in the company's common stock. This rate is determined by discounting the expected dividends of the firm to determine its share value.

The Cost of Common Stock Equity Is the Rate at Which