Question

Which of the following is true? Group of answer choices The price of gold increases when the economy is stable The DJIA is the cost of capital for U.S companies NASDAQ index focuses on large cap stocks and the energy sector The commodities market is the largest market in the world The 30-yr Treasury yield is the base cost of capital for U.S companies

Answer 1

Answer:

Which of the following is true?

a)The price of gold increases when the economy is stable

b)The DJIA is the cost of capital for U.S companies

c)NASDAQ index focuses on large cap stocks and the energy sector

d)The commodities market is the largest market in the world

e)The 30-yr Treasury yield is the base cost of capital for U.S companies

Answer = E

Explanation:

U.S treasury yield represents the risk free rate demanded by investors because its assumed that U.S is risk free, so for companies in the U.S looking for capital over a long period of time the usual use 30-yr Treasury yield as their cost of capital because its represents what they could have invested their funds in at no risk.