Which of the following is a limitation of using a pure play, Ask an Expert

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Which of the following is a limitation of using a pure play and the CAPM to estimate the cost of capital for a small business?

a. Small businesses are typically less diversified than large companies.

b. Employee owners of small businesses receive returns both through employment earnings and return on equity versus through stockholder returns alone.

c. An ownership position in a small business may be less liquid than the stock of a large company.

Answers a. and c. are correct.

Answers a., b., and c. are correct.

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Financial Management, Finance

Category:- Financial Management
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