MCQ On Cost Of Capital

5 Questions | Total Attempts: 295

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MCQ On Cost Of Capital

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Questions and Answers
  • 1. 
    During planning period, marginal cost to raise a new debt is classified as
    • A. 

      Debt cost

    • B. 

      Relevant cost

    • C. 

      Borrowing cost

    • D. 

      Embedded cost

  • 2. 
    Cost of common stock is 14% and bond risk premium is 9% then bond yield is
    • A. 

      1.56%

    • B. 

      5%

    • C. 

      23%

    • D. 

      64.28%

  • 3. 
    In weighted average cost of capital, company can affect its capital cost through
    • A. 

      Policy of capital structure

    • B. 

      Policy of dividends

    • C. 

      Policy of investment

    • D. 

      All of above

  • 4. 
    Risk associated with project and way considered by well diversified stockholder is classified as
    • A. 

      Expected risk

    • B. 

      Beta risk

    • C. 

      Industry risk

    • D. 

      Returning risk

  • 5. 
    Cost of common stock is 13% and bond risk premium is 5% then bond yield is
    • A. 

      $18

    • B. 

      2.60%

    • C. 

      8%

    • D. 

      18%