- CFA Exams
- CFA Level I Exam
- Topic 4. Corporate Issuers
- Learning Module 18. Cost of Capital: Advanced Topics
- Subject 1. Cost of Capital Factors
CFA Practice Question
Which approach is more likely to involve a weighted average of the costs of capital for different business units within a company?
A. Top-down approach
B. Bottom-up approach
C. Cost of equity approach
D. Project-specific approach
Correct Answer: B
Company-specific factors are the primary focuses of a bottom-up approach in estimating the cost of capital.
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