alleryStart learning →Which two elements make up a discount rate in the build-up view?
ADividend yield and book value
BRisk-free rate and a risk premium
CInflation rate and tax rate
DCost of debt and depreciation rate
Answer & Solution
Correct answer: B. Risk-free rate and a risk premium
A discount rate is the risk-free rate on a secure bond plus a premium for the extra risk of the particular investment.
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