A company's overall cost of equity is: Multiple Choice directly related to the risk level of the firm. unaffected by changes in the market risk premium. generally less than the firm's aftertax cost of debt. inversely related to changes in the level of inflation. generally less than its WACC given a debt-equity ratio of. 5.

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Business

Sebastian

18 March, 14:59

A company's overall cost of equity is: Multiple Choice directly related to the risk level of the firm. unaffected by changes in the market risk premium. generally less than the firm's aftertax cost of debt. inversely related to changes in the level of inflation. generally less than its WACC given a debt-equity ratio of. 5.

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Gabrielle Webster · Answer 1

A company's overall cost of equity is directly related to the risk level of the firm.

Explanation:

A company's cost of equity is the compensation that financial markets require to own assets and also to take on the risk that comes with ownership. It is estimated using capital assets pricing model. It is the return firms pay to equity investors as compensation for the risk they took to invest capital. A company's overall cost of equity is directly related to the risk level of the firm.