1. (a) The overall capitalization rate in yield capitalization is a weighted average of the product of the firm’s individual costs of capital and its market value proportion in the capital structure.
2. (b) The overall capitalization rate in direct capitalization is a weighted average of the product of the firm’s direct capitalization rate for each type of security and its market value proportion in the capital structure.

Codification Notes: This section was promulgated as Section III of the Market Valuation Rules for Telephone Companies prior to codification into the Code of Arkansas Rules.