Which of the following statements regarding cost of capital is incorrect? A. The

Question

Which of the following statements regarding cost of capital is incorrect? A. The overall cost of capital that covers the firm's costs of equity, preferred stock, and after-tax debt is called the weighted average cost of capital (WACC). B. The return that lenders (bondholders) require on their loaned funds to the firm is the cost of debt. C. A firm’s capital structure weights are the proportions of the market value of its assets financed via debt, common stock, and preferred stock. D. The beta coefficient of the firm’s stock is its cost of equity.

Explanation / Answer

answer is D

D. The beta coefficient of the firm’s stock is its cost of equity.

beta coefficient measures the degree of senstivity of security's return to market returns.

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