1- The weighted average cost of capital (WACC) typically consists of capital components such as long-term debt, short-term debt, preferred stock, and common stock.

Group of answer choices

True

False

2- If earnings are reinvested, then stockholders will incur an opportunity cost and thus, the firm should earn on its reinvested earnings at least as much as its stockholders could earn on alternative investments of equivalent risk.

Group of answer choices

True

False

3- The CAPM (capital asset pricing model) is one of the methods to estimate the cost of common stock.

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True

False

4- A firm can affect its cost of capital through some factors it can control. One of those factors is the market risk premium.

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True

False

5- A firm's cost of debt is estimated as the coupon rate on its existing debt.

Group of answer choices

True

False