1 25 points eBook) Problem 2-18 Functions of Financial Markets (LO3) Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given table. Callaway Golf (ELY) Alaska Air Group (ALK)) Print Yumi Brands (YUM) References Caterpillar Tractor (CAT) Microsoft (MSFT) Number of Share (millions) Stock Price 94.2 27.30 123.7 50.70 301.7 103.07 543.3 186.66 7,560 242.12 Market Capitalization (5 millions) -$2,572 $ 6,272 $31,096 $101,412 -$1,030,427 a. The price of Yum! Brands stock has risen to $175. What is the market value of the firm's equity if the number of outstanding shares does not change? Note: Enter your answer in dollars not in billions of dollars. b. The rating agency has revised Catalytic Concepts' bond rating to AA (use Table 2.2). What interest rate, approximately, would the company now need to pay on its bonds? Note: Enter your answer as a percent rounded to 1 decimal place. c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live cattle in the future at a fixed price, and the other agrees to sell. Which one sells? a. Market value b. interest rate c. Which one selis? TABLE 2.2 Interest rates on long-term corporate bonds, October 2020. The interest rate is lowest for top-quality (AAA and AA) issuers. The rate rises as credit quality declines. Credit Rating AAA AA A BB Interest Rate 1.69 1.6 1.7 2.4 4.2 5.6 Source: ICE Bank of America Merrill Lynch indices. apter 2 Pre-lecture Questions 4 Problem 2-18 Functions of Financial Markets (LO3) Consider the table shown below to answer the question posed in part a. Parts b and c are independent of the given table. 25 points Skipped Callaway Golf (ELY) Alaska Air Group (ALX) Yunt Brands (YUM) eBook Print Caterpillar Tractor (CAT) Microsoft (MIT) Number of Market Share Capitalization (millions) Stock Price ( millions) 94.2 27.30 $2,572 123.7 50.70 $6,272 301.7 103.07 $31,096 543.3 7,560 186.66 242.12 $101,412 1,830,427 References a. The price of Yum! Brands stock has risen to $180. What is the market value of the firm's equity if the number of outstanding shares does not change? Note: Enter your answer in dollars not in billions of dollars. b. The rating agency has revised Catalytic Concepts' bond rating to A (use Table 2.2) What interest rate, approximately, would the company now need to pay on its bonds? Note: Enter your answer as a percent rounded to 1 decimal place. c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live cattle in the future at a fixed price, and the other agrees to sell. Which one sells? a. Market value b. Interest rate c. Which one sells? Help Save & Che