1. What is COBs weighted average cost of capital? They have the following pre-tax component costs of capital: Debt = 8%, common stock = 14%, preferred stock = 12%. COB is financed 50% by debt, 40% by common stock, and 10% by preferred stock. If COBs tax rate is 40%.

a. 10.80%

b. 9.40%

c. 9.60%

d. 9.20%

e. 8.75%

2. Returns on Brackington, Inc. are shown to be the following:

State Probability Return

Boom 0.25 28%

Normal 0.65 15%

Bust 0.10 -15%

What is the standard deviation of this company's stock?

a. 11.22%

b. 11.78%

c. 12.07%

d. 10.9%

e. 11.50%

c. 11.50%