1.Which is a better measure for risk-free rate, and cost of debt?

Group of answer choices

10-year T-Bond; YTM of long-term corporate bonds

10-year T-bond; Coupon rates of long-term corporate bonds

6-month T-Bond; YTM of long-term corporate bonds

6-month T-Bond; Coupon rates of short-term bonds

2. All FOUR Bonds have

• the same maturity = 10 years,
• the same coupon rate = 9%
• but different bond ratings

Which bond offers the highest Yield-to-Maturity (YTM)?

Group of answer choices

Mackinaw: AAA-rated (high grade)

Kalamazoo: AA rated

Battle Creek: BBB rated

Jackson: BB (low grade)

3. Who has more internal funds for growth?

Analyst Dividend Payout Ratio Share Repurchase

Larry Low Low

Lucy Low High

Luke High High

Linda High Low

Group of answer choices

Larry

Lucy

Luke

Linda

4. How can you assess the business risk of a firm?

Group of answer choices

Estimate its levered beta

Unlever its beta using its target debt/equity ratio

Unlever its beta by using its current debt/equity ratio

Lever up its unlevered beta by using its target debt/equity ratio