Chapter 2 Pre-lecture Questions Saved Help Sove & Exit Submit Check my work 1 Problem 2-18 Functions of Financial Markets (L03) Consider the table shown below to answer the question posed in part a Parts and care independent of the given table 25 Doints COM Number of Share (millions) Stock Price 94.6 $16.36 123.4 $61.96 332.5 $ 35.13 147.4 $597.63 7,705. $ 91.27 Callaway Golf (ELY) Alaska Air Group (ALK) Yum! Brands (YUM Caterpillar Tractor (CAT) Microsoft (PET) Market Capitalization (5 millions) $ 1547.66 $ 7645.86 $ 28,35.73 5 88,090.65 5703,235.35 Pint Reforences a. The price of Yumi Brands stock has risen to $160 What is the market value of the firm's equity if the number of outstanding shares does not change? (Enter your answer in billions rounded to 3 decimal places.) Market value b. The rating agency has revised Catalytic Concepts' bond rating to A (use Table 22). What interest rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a percent rounded to 1 decimal place.) Check my work outstanding shares does not change? (Enter your answer in billions rounded to 3 decimal places.) Market value b. The rating agency has revised Catalytic Concepts' bond rating to A (use Table 2.2). What interest rate, approximately, would the company now need to pay on its bonds? (Enter your answer as a percent rounded to 1 decimal place.) Interest rate % c. A farmer and a meatpacker use the commodity markets to reduce their risk. One agrees to buy live cattle in the future at a fixed price, and the other agrees to sell. Which one sells? O A farmer O A meatpacker TABLE 2.2 Interest rates on long-term corporate bonds, May 2018. The interest rate is lowest for top-quality (AAA and AA) issuers. The rate rises as credit quality declines Credit Rating Interest Rate AAA 3.5% AA 3.5 A 3.8 BBB 4.3 BB 5.1 6.3 B Source: ICE Bank of America Meril Lynch indices