State whether the following statements are true or false. 6. Hedging is an investment to reduce the risk of adverse price movements in an asset. ( ) 7. The limitation of CAPM is beta does not remain stable over time. ( ) 8. Interest on debts is an expense deducted before tax, which contributes to reducing the cost of deb. ( ) 9. When investors become more risk-averse will lead the required rate of return to increase. ( ) 10. Ahmed has a bond with a par value of OMR (1000). he sold it at OMR (1100), which means a market interest rate is equal to the coupon rate of the bond. ( )
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Question 2:
State whether the following statements are true or false.
6. Hedging is an investment to reduce the risk of adverse price movements in an asset. ( )
7. The limitation of CAPM is beta does not remain stable over time.
( )
8. Interest on debts is an expense deducted before tax, which contributes to reducing the cost of deb. ( )
9. When investors become more risk-averse will lead the required
10. Ahmed has a bond with a par value of OMR (1000). he sold it at OMR (1100), which means a market interest rate is equal to the coupon rate of the bond. ( )
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