The value of a share will drop immediately to a price that reflects the value of the new information. Question 20 9p Which of the following statements is not correct? The cost of equity can be found by either the dividend growth approach or the Security Market Line (CAPM) approach Book value capital structure weights should be used to calculate the WACC instead of market value weights. The cost of equity is the return that equity investors require on their investment in the firm. If the firm has preferred stock in its capital structure, the cost of preferred stock should be included in the cost of capital. The cost of debt is the return that lenders require on the firm's debt. Question 21 9 pt What is the effective annual rate of an 11% APR loan compounded semiannually? 11.30%