Mark The Following True or False

1) The Firm's cost of capital may also be referred to as the firm's opportunity cost of capital.

2) Corporations have two costs of common equity, one for retained earnings and one if the company issues new stock.

3) A security with a reasonably stable price will have a lower required rate of return than a security with an unstable price.

4) A short term T-bill's rate of return should be used in the CAPM formula to determine the cost of equity capital regardless of the length of the project under construction.