The cost of common stock equity may be estimated by using the ________.
A) yield curve
B) break-even analysis
C) Gordon model
D) DuPont analysis

Question

Quizplus · Accepted Answer

The cost of common stock equity can be estimated using the Gordon model, which is also known as the dividend discount model. This model assumes that the cost of equity is equal to the dividend yield plus the expected growth rate of dividends. Other options such as yield curve, break-even analysis, and DuPont analysis are not typically used to estimate the cost of common stock equity.

The Cost of Common Stock Equity May Be Estimated by Using