Answered: If the company's cost of capital is…

If the company's cost of capital is 12%, risk free rate is 4%, and the business risk premium is 6%; then what would be the financial risk premium? а. 2% O b. 6% О с. 22% O d. 10%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 1hM

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Question

Portfolio management

If the company's cost of capital is 12%, risk free rate is 4%, and the business
risk premium is 6%; then what would be the financial risk premium?
а. 2%
O b. 6%
С. 22%
O d. 10%

Definition Definition Act of managing the funds of another individual, company, or institution to maximize their wealth within a given time. Portfolio management helps to achieve financial objectives by reducing the risk of loss.

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