Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5. Which of the following is a statement of weak-form efficiency? 1. If markets are efficient in the weak form, then it is impossible to
5. Which of the following is a statement of weak-form efficiency? 1. If markets are efficient in the weak form, then it is impossible to make consistently superior profits by using trading rules based on past returns. II. If markets are efficient in the weak form, then prices will adjust immediately to public information III. If markets are efficient in the weak form, then prices reflect all information. a. I only b. Il only C. II and III only d. lll only continued Page 4 of 7 ECON 2191-WE01 6. Suppose that your firm's current unlevered value, V, is 800,000, and its marginal corporate tax rate is 21 percent. Also, you model the firm's PV of financial distress as a function of its debt level according to the relation: PV of financial distress = 800,000 X (D/V)? What is the firm's levered value if it issues 200,000 of perpetual debt to buy back stock? a. 792,000. b. 869,555. C. 920,000 d. 350,000 7. Company X has 100 shares outstanding. It earns 1,000 per year and expects to pay all of it as dividends. If the firm expects to maintain this dividend forever, calculate the stock price after the dividend payment. (The required rate of retum is 10 percent.) a. . C. d. 110 100 90 10
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started