6. Company A is trading at $120 per share at market close today. Last week, Company A acquired Company B for a total of $20 million. The deal involved a mixture of cash and stock. The current Enterprise Value of Company A is $300 million. Company A has $5 million in cash currently on its Balance Sheet. If there are 1 million shares of Company A in the market, how much debt does Company A currently hold?

a. $180 million

b. $165 million

c. $185 million

d. $160 million

e. Not enough information provided to answer

7. My portfolio holds 2 securities, Microsoft (MSFT) and Tesla (TSLA). MSFT comprises 40% of the portfolio while TSLA makes up the other 60%. The 10-yr Treasury currently yields 1.00%, the corporate tax rate is 50% and US equities carry a 6% premium to the risk-free rate. MSFT has a Beta of 1 and an AA credit rating, giving it a 2% cost of debt. TSLA has a Beta of .5 and a BB credit rating, giving it a 7% cost of debt. Using the Capital Asset Pricing Model (CapM), what is the expected return of my portfolio?

a. 7.7%

b. 5.2%

c. 5.8%

d. 7.8%

e. Not enough information provided

8. Which asset is the most illiquid (the least liquid)?

a. Accounts receivable

b. Long-term debt

c. PP&E (Property Plant and Equipment)

d. Cast

e. Goodwill

9. If the price of Norfolk Southern Corp (ticker symbol NSC) were to increase prior to the announcement of a positive earnings surprise, this would support which of the following?

a. Strong form EMH

b. Semi-strong form EMH

c. Weak form EMH

10. What is your total return if you buy Apple at $200, receive $8 in dividends, and then sell at $230?

a. 4.0%

b. 13.0%

c. 15.0%

d. 16.5%

e. 19.0%