Of the following, an example of a component of a firm's cost of capital is ____.
A) repurchase of company stock
B) investment of corporate funds into a money market account
C) the purchase of another company's bonds
D) the return on common stock required by investors

Question

Quizplus · Accepted Answer

The return on common stock required by investors is a component of a firm's cost of capital as it represents the return that the company needs to provide to its investors in order to compensate for their investments in the company's common stock. The other options listed are not directly related to the cost of capital, as they are either financing or investment activities that the firm may undertake.

Of the Following, an Example of a Component of a Firm's