36.a

b.

c.

d.

e.

Which of the following statements concerning preferred shares is TRUE? Preferred shareholders have a prior claim on the income and assets of the firm as compared to the claims of lenders. Preferred stock dividends per share are normally increased as the earnings of the firm increase. Preferred stock dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems. Preferred shares typically have a maturity date. None of the above The common stock of BMX is currently trading at $15 per share and the company has 1.5 million shares outstanding. Its preferred shares are trading at $7.48 per share and there are 600,000 preferred shares outstanding. BMX also has $4 million of debt outstanding with a yield to maturity of 10% and selling at par. If the required return on common stock is 12%, the return on preferred stock 10% and the company's tax rate 30%, what is the company's weighted average cost of capital? O 11.16% 11.58% 9.70% 10.16% None of the above What is the approximate IRR for a project that costs $100,000 and provides cash inflows of $10,000 at year 1, and $30,000 at year 2, 3, 4, and 5? 6.90% 7.20% 8.40% 9.00% None of the above Suppose you are trying to price a bond. Which of the following is TRUE? All else the same, bonds with higher coupon payments are generally less sensitive to changes in interest rates than bonds with lower coupon payments All else the same, when market interest rates rise, bond prices will rise as well. All else the same, bonds with longer maturities are generally less sensitive to changes in interest rates than bonds with shorter maturities. All else the same, yields on bonds are always lower than the coupon rate. None of the above NPV and IRR can provide contradictory decisions for mutually exclusive projects when the risk of the projects may differ. the scale of the projects may differ. the discount rates on the projects may differ. All of the above. None of the above