Chapter 17—The Corporate Form and the Cost of Capital Key
1. The cost of capital is a combination of a firm’s payments to the different sources of capital funding is called
2. The cost of capital is determined by
3. Capital markets
4. Stocks are a
5. Common stockholders
6. Stock is
7. A device used to measure the movement of stock prices is called a(n)
8. Which index is made up of mainly tech and internet stocks?
9. The supply of stock
10. Market prices contain
11. Bonds are
12. The rate of interest paid on a bond is called the
13. Bonds generally
14. The price of a bond and the interest rate
15. Capital structure refers to
16. The optimum capital structure
17. Dividends
18. The cost of capital to a firm is equal to
19. Beta is
20. The Capital Asset Pricing Model.
21. A risk-free rate can be measured by
23. If the discount rate increases
24. NPV calculation need to include
25. The corporate form of business allows a more efficient way to manage risk relative to
26. Stockholders manage risk by
27. Bondholders and stockholders
28. For diversification to be a successful management strategy, it must
29. Capital can be treated as a free resource.
30. The cost of capital from different sources is called the weighted average cost of capital.
31. Stocks are a form of debt obligation.
32. Bond covenants are used to address the riskiness of bonds.
33. Bonds are a form of debt.
34. Bond prices are determined mainly by the demand for bonds.
35. Bond prices and interest rates are inversely related.
36. The Capital Asset Pricing Model determines the weighted average cost of capital.
37. Beta measure overall risk in the stock market.
38. Beta measures the relative risk of a company’s stock relative to overall risk in the stock market.
39. The CAPM does not consider risk-free investments.
40. The NPV of a project rises as the discount rate rises.
41. Bondholders are not indifferent when a company sells more bonds.