Question
1. The Up and Coming Corporation's common stock has a beta of 0.9. If the risk-free rate is 4 percent and the expected return on
1.
The Up and Coming Corporation's common stock has a beta of 0.9. If the risk-free rate is 4 percent and the expected return on the market is 15 percent, what is the company's cost of equity capital? (Do not round your intermediate calculations.) |
13.2%
14.46%
17.5%
14.59%
13.9%
2.
The Down and Out Co. just issued a dividend of $2.36 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of equity? (Do not round your intermediate calculations.) |
10.72%
5.12%
11%
10.45%
11.55%
3.
You own the following portfolio of stocks. What is the portfolio weight of stock C?
Stock | Number of Shares | Price per Share |
A | 120 | $29 |
B | 720 | $25 |
C | 450 | $49 |
D | 220 | $48 |
33.28 percent
52.80 percent
40.77 percent
59.23 percent
19.52 percent
4.
4.
Holdup Bank has an issue of preferred stock with a $10 stated dividend that just sold for $90 per share. What is the bank's cost of preferred stock? |
11.67%
11.11%
10.00%
11.56%
10.67%
5.
Stock in Country Road Industries has a beta of 0.72. The market risk premium is 10 percent, and T-bills are currently yielding 4 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 3.5 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.) |
8.7%
11.2%
8.67%
9.94%
8.32%
6.
The Auto Group has 1,000 bonds outstanding that are selling for $900 each. The company also has 8,900 shares of preferred stock at a market price of $45 each. The common stock is priced at $40 a share and there are 35,000 shares outstanding. What is the weight of the preferred stock as it relates to the firm's weighted average cost of capital? |
7.42 percent
33.33 percent
14.83 percent
51.84 percent
29.66 percent
Please answer all questions, thank you
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