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21) A firm is financed 55% by common stock, 10% by preferred stock, and 35% by debt. The required return is 15% on the common,
21) A firm is financed 55% by common stock, 10% by preferred stock, and 35% by debt. The required return is 15% on the common, 10% on the preferred, and 8% on the debt. If the tax rate is 21%, what is the WACC? A) 10.72% 21) B) 11.46% C) 11,70% D) 12.05% 22) How is it possible for real rates of return to increase during times when the rate of inflation increases? 22) A) Inflation increased more than the real return. B) Nominal returns increased less than inflation. C) Nominal returns increased more than inflation. D) Nominal returns actually decreased. 23) Which one of the following guarantees is offered to common stock investors? 23) A) Guarantee to receive capital gains B) Guarantee only to receive a refund of principal C) Guarantee to receive dividends D) No guarantees of any form 24) The idea that investors, on average, have earned a higher return from common stocks than from Treasury bills supports the view that: 24) A) real rates of return will be lower during periods of price stability. B) there is a relationship between risk and return. C) stocks should be avoided when inflation is low. D) investors are irrational
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