The ________ is the rate of return that a firm must earn on its investments in order to maintain the market value of its stock.
A) yield to maturity
B) cost of capital
C) internal rate of return
D) modified internal rate of return

Question

Quizplus · Accepted Answer

The cost of capital is the rate of return that a firm must earn on its investments in order to maintain the market value of its stock. This includes both the cost of equity and the cost of debt. Yield to maturity, internal rate of return, and modified internal rate of return are all used in financial analysis, but they do not specifically address the cost of capital.

The ________ Is the Rate of Return That a Firm