A price for equity is called______________?
Correct answer: B. Cost of equity
- A. Interest rate
- B. Cost of equity
- C. Debt rate
- D. Investment return
Explanation
The required return demanded by shareholders for providing equity capital is called the cost of equity. Interest rate or debt rate applies to borrowed funds, not shareholders’ capital.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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