Which of the following will impact the cost of equity component in the weighted average cost of capital?
A)The risk-free rate
B)Beta
C)Expected return on the market
D)All of these

Question

Quizplus · Accepted Answer

All of these factors will impact the cost of equity component in the weighted average cost of capital. The risk-free rate provides a baseline for the required return on investment for a risk-free asset, which is a starting point for determining the required return for equity investors. Beta measures the systematic risk of the company, which is used to determine the relative risk of the company compared to the market. The expected return on the market is used as a benchmark for determining the required return for equity investors.

Which of the Following Will Impact the Cost of Equity