Number of Share

(millions)Stock Price=Market

Capitalization

($ millions)Callaway Golf (ELY)94.6$16.36=$1547.66Alaska Air Group (ALK)123.4$61.96=$7645.86Yum! Brands (YUM)332.5$85.13=$28,305.73Caterpillar Tractor (CAT)147.4$597.63=$88,090.66Microsoft (MSFT)7,705.0$91.27=$703,235.35

a.The price of Yum! Brands stock has risen to $170. What is the market value of the firm's equity if the number of outstanding shares does not change?

b.The rating agency has revised Catalytic Concepts' bond rating to BBB (useTable 2.2). What interest rate, approximately, would the company now need to pay on its bonds?

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?

multiple choice

• A farmer
• A meatpacker