1. Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15.00 a share. The firm also has a bond issue with a present value of $240,800. The cost of equity is 13 percent while the cost of debt is 9.85 percent. The firm has a beta of 1.48 and a tax rate of 35 percent. What is the weighted average cost of capital? A. 10.07 percent B. 10.87 percent C. 12.36 percent D. 10.70 percent E. 10.47 percent

2. Electronics Galore has 950,000 shares of common stock outstanding at a market price of $38 a share. The company also has 40,000 bonds outstanding that are quoted at 106 percent of face value. What weight should be given to the debt when the firm computes its weighted average cost of capital? A. 42 percent B. 46 percent C. 50 percent D. 54 percent E. 58 percent

3. Mary just purchased a bond which pays $60 a year in interest. What is this $60 called? A. coupon B. face value C. discount D. call premium E. yield

4. The specified date on which the principal amount of a bond is payable is referred to as which one of the following? A. coupon date B. yield date C. maturity D. dirty date E. clean date