{"id":33763,"date":"2024-04-15T09:21:19","date_gmt":"2024-04-15T09:21:19","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=33763"},"modified":"2024-04-15T09:21:19","modified_gmt":"2024-04-15T09:21:19","slug":"for-the-computation-of-cost-of-equity-arrange-the-following-measures-in-the-ascending-order-of-accuracy-1-capital-asset-pricing-model-2-dividend-price-ratio-3-earning-price-ratio-4-dividend-price","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/for-the-computation-of-cost-of-equity-arrange-the-following-measures-in-the-ascending-order-of-accuracy-1-capital-asset-pricing-model-2-dividend-price-ratio-3-earning-price-ratio-4-dividend-price\/","title":{"rendered":"For the computation of cost of equity, arrange the following measures in the ascending order of accuracy 1. Capital Asset Pricing Model 2. Dividend-Price Ratio 3. Earning-Price Ratio 4. Dividend-Price Plus Growth Ratio"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9830a0e1758\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"true\">\r\n                    1, 3, 2, 4                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    4, 1, 3, 2                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    3, 2, 4, 1                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    2, 4, 1, 3                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is A. 1, 3, 2, 4.<\/p>\n<p>The Capital Asset Pricing Model (CAPM) is the most accurate measure of cost of equity. It takes <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> into account the risk-free rate, the market risk premium, and the beta of the stock. The dividend-price ratio (DPR) is a less accurate measure of cost <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> of equity. It only takes into account the dividend yield of the stock. The earnings-price ratio (P\/E ratio) is the least accurate measure of cost of equity. It only takes into account the earnings per share of the stock.<\/p>\n<p>The CAPM is the most accurate measure of cost of equity because it takes into account the risk-free rate, the market risk premium, and the beta of the stock. The risk-free rate is the rate of return on a risk-free investment, such as a U.S. Treasury bill. The market risk premium is the additional return that investors demand for investing in stocks over a risk-free investment. The beta of a stock is a measure of its volatility relative to the market. A stock with a beta of 1 has the same volatility as the market, a stock with a beta of 2 is twice as volatile as the market, and a stock with a beta of 0.5 is half as volatile as the market.<\/p>\n<p>The DPR is a less accurate measure of cost of equity because it only takes into account the dividend yield of the stock. The dividend yield is the annual dividend per share divided by the stock price. The DPR does not take into account the risk of the stock or the growth potential of the stock.<\/p>\n<p>The P\/E ratio is the least accurate measure of cost of equity because it only takes into account the earnings per share of the stock. The P\/E ratio does not take into account the risk of the stock or the growth potential of the stock.<\/p>\n<p>In conclusion, the CAPM is the most accurate measure of cost of equity, followed by the DPR, and then the P\/E ratio.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>For the computation of cost of equity, arrange the following measures in the ascending order of accuracy 1. Capital Asset Pricing Model 2. Dividend-Price Ratio 3. Earning-Price Ratio 4. 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