The cost of retained earnings
1. The cost of raising capital through retained earnings is _____________ (a. less than, b. greater than) the cost of raising capital through issuing new common stock
2. The current risk-free rate of return is 3.8%. The market risk premium is 6.1%. D'Amico Co. has a beta of 0.87. Using the Capital Asset Pricing Model (CAPM) approach, D' Amico's cost of equity is ________ (a. 10.0%, b. 9.6%, c. 10.9%, d. 9.1%).