Using the capital asset pricing model, the cost of common stock equity is the return required by investors as compensation for
A. the specific risk of the firm.
B. the firm’s diversifiable risk.
C. price volatility of the stock.
D. the firm’s nondiversifiable risk.
Answer:D
Using the capital asset pricing model, the cost of common stock equity is the return required by investors as compensation for
A. the specific risk of the firm. B. the firm’s diversifiable risk. C. price volatility of the stock. D. the firm’s nondiversifiable risk.