Question

The rate of return on its existing assets that a firm must earn to maintain the current value of the firm's ordinary shares is called

Answer 1

Answer:

The rate of return on its existing assets that a firm must earn to maintain the current value of the firm's stock is called the : cost of equity

Answer 2

The rate of return on its existing assets that a firm must earn to maintain the current value of the firm's ordinary shares is called weighted average cost of capital.

• it is the amount that need to be paid to all the security holders.
• these security holders finances the assets of the company.
• weighted average cost of capital is the average payment to its security holders.
• average cost includes common stock,preferred stock and other form of liabilities.