47, A bond sold at par with a coupon rate of 7% will have a YTM: A) greater than 7% B) less than 7% C) equal to 7% D) different from the market rate 48. Cash payments from preferred stock are: A) valued by taking the future value of all cash flows B) finite like bonds reflecting the liability nature of preferred stock C) discounted using the same valuation model as for bonds D) discounted as a perpetuity 49. Pepsico's next annual dividend is expected to be $1.14 a share. Dividends have been growing at a rate of 6% a year and you expect this rate to continue indefinitely. If your required rate of return for this stock is 9%, what is the maximum price you would be willing to pay for it? A) $38 B) $42 C) $12.68 D) $53.24 50. A leverage effect will occur if: A) fixed operating costs are greater than zero or if interest expense is less than zero B) fixed operating costs are greater than zero or if interest expense is greater than zero C) fixed operating costs are less than zero or if interest expense is greater than zero D) fixed operating costs are less than zero or if interest expense is less than zero