In calculating the cost of common stock equity, ________
A) the use of the capital asset pricing model (CAPM) is often preferred, because the data required are more readily available
B) the use of the CAPM is preferred, because it directly considers risk and the effect of inflation on the stock prices
C) the use of the constant-growth valuation model is often preferred, because the data required are more readily available
D) the use of the constant-growth valuation model is often preferred, because it has a stronger theoretical foundation
C
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Bonnie's Bon Bons is a successful retail chain with franchises all over the country, but it has no presence on the Internet. Catherine's Confections is a successful mail-order business with no storefront presence
The two companies decided to merge, which immediately gave Bonnie's Bon Bons an Internet presence and opened the door to customers who wanted to buy Catherine's Confections at retail locations. This merger represents a shortcut to growth, in which companies acquire rather than develop a capability. Indicate whether the statement is true or false.
Financial institutions must invest heavily in security safeguards because they are obvioustargets for theft
Indicate whether the statement is true or false