NAME: R grow at a constant rate of 5% (fidmng the just-ended year (FCFD) 0f $100 million, V\"? ' .,.,_ . r all future years. If the weighted average cost of a.$1,500 , In millions? b.$2,500 c.$1.429 d.$1,575 e.$3,500 15. Allother things equal, which of the follo by investors for a new corporate bond? 21. The issuer's latest earnings report meets or exceeds expectations. b. The addition of a call provision. c. The rating agencies change the bond's rating from Baa to Aaa. d. Maklng the bond a secured rst mortgage bond rather than an unsecured debenture. e. Adding restrictive covenants that limit the issuance of additional debt unless performance targets '9': :1 are met. 1 Wlng would be most likely to increase the coupon rate required 16. EBIT divided by Interest Charges is known as the: a. Debt-to-Assets Ratio b. Times-interest-earned Ratio 0. Prot margin Ratio (1. Current Ratio e. Quick Ratio 17. Alvarado, Inc. stock is trading at $35 a share. Call options on the company's stock are also available, some with a strike price of $30 and some with a strike price of $40. Both options expire in three months. Which of the following best describes the value of these options? a. The options with the $30 strike price will sell for less than the options with the $40 strike price. b. The options with the $30 strike price have an exercise value of $10. c. The options with the $40 strike price have an exercise value greater than $0. d. If Alvarado's stock price rose by $5, the exercise value of the options with the $30 strike price would also increase by $5. ' e. The options with the $30 strike price will sell for exactly $5. 18. The required returns of Stocks X and Y are rx = 10% and rY = 12%. Which of the following statements is CORRECT? a. If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X. b. If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price. 0. The stocks must sell for the same price. (1. Stock Y must have a higher dividend yield than Stock X. e. If Stock Y has the lower expected dividend yield, then it must have the higher expected growth rate. Page 4