Borderline Co. issued 11-year bonds one year ago at a coupon rate of 8.2% (10 years left until maturity). The bonds make semiannual payments. If the YTM (yield to maturity) on these bonds is 9.4%, what is the current bond price? a. 936.07 b. 1, 123.92 c. 1, 055.83 d. 856.87 Warren Corporation will pay a $3.60 per share dividend next year. The company pledges to increase its dividend 4.5% per year, indefinitely. If you require a 10% return on your investment, how much will you pay for the company's stock today? a. 42.35 b. 56.91 c. 69.45 d. 65.45 Wyden Brothers uses the CAPM to calculate the cost of equity capital. The company's capital structure consists of common stock, preferred stock, and debt. Which of the following events will increase the company's WACC? a. A reduction in the market risk premium. b. A decrease in the risk-free rate. c. A decrease in the company's beta. d. An increase in expected inflation. Which one of the following portfolios should have the least systematic risk? a. 50 percent invested in U.S. Treasury bills and 50 percent in a market index mutual fund b. 20 percent invested in U.S. Treasury bills and 80 percent invested in a stock with a beta of .80 c. 10 percent invested in a stock with a beta of 1.0 and 90 percent invested in a stock with a beta of 1.40 d. 100 percent invested in a mutual fund which mimics the overall market e. 100 percent invested in U.S. Treasury bills. Your portfolio has a beta of 1.18. The portfolio consists of 25 percent U.S. Treasury bills, 30 percent in stock A, and 45 percent in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? a. 1.96 b. 1.10 c. 1.24 d. 1.40