Question 10 3 pts Verano Inc. has two business divisions - a software product line and a waste water clean-up product line. The software business has a cost of equity capital of 9% and the waste water clean-up business has a cost of equity capital of 4%. Verano has 50% of its revenue from software and the rest from the waste water business. Verano is considering a purchase of another company in the waste water business using equity financing. What is the appropriate cost of capital to evaluate the business? O 9% O 6.5% 04% Question 11 3 pts A stock's beta measures the: O quantity of non-diversifiable risk an investor must bear. O market risk premium on the stock. quantity of firm specific risk an investor must bear. O quantity of total risk an investor must bear Question 12 3 pts As debt is added to the capital structure, the: Cost of Debt can be expected to decline. Cost of Equity Capital can be expected to rise Cost of Equity Capital can be expected to decline Question 9 3 pts Which of the following statements is FALSE? We should use the arithmetic average return when we are trying to estimate an investment's expected return over a future horizon based on its past performance. O The geometric average return will always be above the arithmetic average return, and the difference grows with the volatility of the annual returns. The compounded geometric average return is most often used for comparative purposes. The geometric average return is a better description of the long-run historical performance of an investment