Question
Which one of the following statements reflects the proper use of the weighted average cost of capital? It is used by investors as the
Which one of the following statements reflects the proper use of the weighted average cost of capital? It is used by investors as the required return on the company's stock It is used as the discount rate in capital budgeting It is the historical average of the firm's stock returns. It is an estimate of the coupon rate that the firm will need on a new debt issue. Question 27 3 pts Which of the following statements most correctly describes why investors are not cannot force compensation (extra returns) for unsystematic risk? Failing to diversify to remove unsystematic risk is poor financial planning and those investors don't deserve extra compensation. Actually, investors can force compensation for unsystematic risk, it is systematic risk that does not receive extra returns. Individual unsystematic risk events cannot be anticipated or projected so investors don't know that they will need to be compensated with more risk. When investors ask the high unsystematic risk companies for more returns the companies try but typically are not successful.
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