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Nastasia [14]
3 years ago
12

What are the two risk components that determine a firm's cost of equity?

Business
1 answer:
Yanka [14]3 years ago
5 0

Traditionally, the formulas used to express a firm's cost of equity are the dividend capitalization model and the capital asset pricing model (CAPM).

Explanation:

Generally, two risk components determine a firm's cost of equity. The first is the systematic risk associated with the broader equity market. All firms are exposed to this risk, and it cannot be mitigated through diversification.

The second risk component is the unsystematic risk associated with the firm in question. This risk, often reflected as beta, a measure of the stock's volatility in relation to the volatility of the broader market, can be mitigated via diversification.

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The hunting plan can conclude where you are going hunting and the numbers to call if you are in danger
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How have the members of swaayam ksheer been able to double their profits?
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Why does manufacturing's multiplier effect matter to an economy?
irga5000 [103]

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It has a greater impact than service industries.

Explanation:

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3 years ago
A company had net income of $40,000, net sales of $300,000, and average total assets of $200,000. Its profit margin and total as
kvasek [131]

A company had net income of $40,000, net sales of $300,000, and average total assets of $200,000. The profit margin and total asset turnover ratio are 13.3% each. 1.5.

There are two methods that can be used to calculate return on assets. The first method is to divide the company's net income by its average total assets. The second method is to multiply the company's net profit margin by sales.

Return on assets is calculated by dividing a company's after-tax earnings by total assets. The balance sheet total corresponds to the company's total equity and liabilities. This value can be found on the company's balance sheet.

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4 0
1 year ago
If a journal entry and posting for the use of one month of rent from the prepaid rent account during the year is accidently omit
tensa zangetsu [6.8K]

Answer:

Expenses will be understated, hence, Net Income will be overstated.

Rent prepaid will be overstated, hence, current assets will be overstated.

Explanation:

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4 0
3 years ago
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