Capital Risk Adjustment MCQ (Multiple Choice Questions) PDF Download

A risk associated with the project and the way considered by well diversified stockholder is classified as

1. expected risk
2. beta risk
3. industry risk
4. returning risk

If the future return on common stock is 14% and the rate on T-bonds is 5% then the current market risk premium will be

1. 0.19
2. 0.09
3. 9
4. 19

The method in which company finds other companies considered in same line of business to evaluate divisions is classified as

1. pure play method
2. same play method
3. division line method
4. single product method

If the future return on common stock is 19% and the rate on T-bonds is 11% then the current market risk premium will be

1. 30
2. 0.3
3. 0.08
4. 8

In weighted average cost of capital, the cost of capital which is risk adjusted and developed for each category of

1. long-term projects
2. industry [industrial] projects
3. divisional projects
4. short-term projects