Global Cost of Capital
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Questions and Answers

Why do investors expect a benefit from organizations?

  • Because they want to support entrepreneurship
  • Because they are required to by law
  • Because they want a return on their investment (correct)
  • Because they are charitable
  • What form does the cost of raising capital take for bonds?

  • Interest and yields (correct)
  • Rent and utilities
  • Salaries and wages
  • Dividends
  • What is the cost of raising capital for organizations?

  • The benefit organizations receive
  • The cost of production
  • The cost of advertising
  • The benefit investors receive (correct)
  • What form does the cost of raising capital take for equity?

    <p>Dividends</p> Signup and view all the answers

    What happens when a company issues investments internationally?

    <p>The costs associated with raising capital decrease</p> Signup and view all the answers

    What happens as the amount of risk increases?

    <p>The rates of return increase</p> Signup and view all the answers

    Why does an investor diversify into investments that generate lower returns?

    <p>Because the best investment opportunities are exhausted</p> Signup and view all the answers

    What happens to the rate of return when an investor continues to invest in the domestic market?

    <p>It decreases as the investor reaches a point of diminishing returns</p> Signup and view all the answers

    When does an investor choose to invest in risk-free options?

    <p>When the best investment increases risk more than the expected rate of return</p> Signup and view all the answers

    How does international optimization change the dynamic between risk and returns?

    <p>It changes the potential dynamic between risk and returns in several important ways</p> Signup and view all the answers

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