Matching
Match the following with the items below:
Premises:
The distribution expense involved in selling securities to the public.
The cost of alternative sources of financing to the firm.
The result of multiplying the cost of each item in the capital structure by its corresponding representation in the overall capital structure and summing the results.
The cost of the most recent dollars of funds raised.
Features the best possible mix of debt, preferred stock, retained earnings, and new common stock.
Determines the value of a share of stock by taking the present value of the expected future stream of dividends.
Appears on the balance sheet under long-term liabilities and equity.
Relates the risk-return tradeoffs of individual securities to market returns.
Responses:
weighted average cost of capital
optimal capital structure
dividend valuation model
capital asset pricing model
marginal cost of capital
flotation costs
financial capital
cost of capital
Correct Answer:
Premises:
Responses:
The distribution expense involved in selling securities to the public.
The cost of alternative sources of financing to the firm.
The result of multiplying the cost of each item in the capital structure by its corresponding representation in the overall capital structure and summing the results.
The cost of the most recent dollars of funds raised.
Features the best possible mix of debt, preferred stock, retained earnings, and new common stock.
Determines the value of a share of stock by taking the present value of the expected future stream of dividends.
Appears on the balance sheet under long-term liabilities and equity.
Relates the risk-return tradeoffs of individual securities to market returns.
Premises:
The distribution expense involved in selling securities to the public.
The cost of alternative sources of financing to the firm.
The result of multiplying the cost of each item in the capital structure by its corresponding representation in the overall capital structure and summing the results.
The cost of the most recent dollars of funds raised.
Features the best possible mix of debt, preferred stock, retained earnings, and new common stock.
Determines the value of a share of stock by taking the present value of the expected future stream of dividends.
Appears on the balance sheet under long-term liabilities and equity.
Relates the risk-return tradeoffs of individual securities to market returns.
Responses:
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