7.Discuss what you would expect to happen to the typical corporation's WACC, cost of debt, and cost of equity if the firm decides to use more debt in its capital structure.

8.If the risk-free rate is currently 4.5% and the market rate of return is 10.5%, what would be the required rate of return on a stock with a beta of .80?Now suppose that the stock is selling for $32 per share and just recently paid a dividend of $1.80 and it has an expected growth rate of 6.2%.Is the price of this stock too high or too low?Explain.Also explain what would happen to the required return of this stock if inflationary expectations increase by 2%, or the rate of return on the market decreases to 10% or the beta of the stock decreases to 1.1.Analyze each of these changes independently.

10.Explain the relationship between an investment's market risk, diversifiable risk and total risk.Please be specific.

13. Explain how the call provision, convertibility and warrants will affect the risk and required return of a bond issue.