Questions 17 .

Which of the following statements is/are TRUE about private firms?

I. The owners of private businesses are usually more diversified than owners of publicly traded companies

II. Using the stock beta to arrive at the cost of equity of a private firm will underestimate the firm's cost of equity

III. Private businesses are usually characterized by more conflicts of interest than publicly traded companies

IV. The cost of debt for private firms is higher than the cost of debt for publicly traded firms

Question 17 options:

III only

I only

I and III only

II and IV only

Questions 18.

: Which of the following is/are TRUE about the hurdle rate of return?

I. It is the minimum return that a project should make to be deemed acceptable

II. It is the historical rate of return on divisional investments

III. It is a required return from the providers of funds perspective

IV. It is the rate at which a project breaks even and investors are correctly compensated for their risk.

Question 18 options:

III and IV

I only

I, III and IV

II only