A firms estimated costs of debt, preferred stock, and common stock are 12%,17%, and 20%, respectively. Assuming equal funding from each source and a 40% tax rate, the weightedaverage cost of capital i
A. 13.9%.
B. 14.7%.
C. 16.3%.
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Consider three bonds that have the same yield to maturity and maturity. The bond with the greatest reinvestment risk is most likely the one selling at:
A. par.
B. A discount.
C. A premium.
An observation that stocks with above average price-to-earnings ratios have consistently underperformed those with below average price-to-earnings ratios least likely contradicts which form of the mar
A. Weak form
B. Strong form
C. Semi-strong form
In a sales-driven pro forma analysis, net income grows from $1.2 million to $1.26 million. Assuming a dividend payout ratio of 40%, the increase in retained earnings is closest to (in $ millions):
A. 0.720.
B. 0.756.
C. 1.260.
Consider two ten-year bonds, one that contains no embedded options and the other that gives its owner the right to convert the bond to a fixed number of shares of the issuers common stock. The convert
A. lower.
B. higher.
C. The same.