1) Regression models can be used to identify relationships between variables and the results are often used for forecasting.

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True

False

2)The cost of capital is the weighted average cost of debt, preferred stock, and common equity that the corporation uses to finance its assets, or its weighted average cost of capital (WACC). That is, it is the factor in choosing the corporations mixture of debt, preferred stock, and common equity, and in decisions to lease rather than buy assets.

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True

False

3) If compounding occurs more than once a year, the nominal rate is higher than the effective annual rate (EAR).

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True

False