Please explain following question, thank you.

1.When market interest rate is lower than coupon rate, a callable bond

Select one:

a.will necessarily be called.

b.may be called depending on whether the market interest rate is low enough.

c.may be called depending on whether the firm has sufficient liquidity.

2.BC is a digital camera manufacturer. It has just paid a dividend of $0.77 per share. The number of outstanding shares is 700,000 and the market price of the stock is $9.2. The company is expected to increase dividend by 6.46% per year indefinitely. The company also has 8,000 zero coupon bonds outstanding (par value = $1,000) with 7 years to maturity currently selling at $469.2. The risk-free rate is 2.4% and the market risk premium is 6.9%. The beta of ABC's common stock is 1.2. The corporate tax rate is 35%. What is the weighted average cost of capital (WACC) of ABC using a conservative estimate of cost of equity?

Select one:

a.11.68%

b.12.37%

c.13.68%

3.Firms would want a lease to be classified as an operating lease because

Select one:

a.this decreases the apparent leverage on the firm's balance sheet.

b.this increases the apparent leverage on the firm's balance sheet.

c.this increases the market value of assets on the firm's balance sheet.

4.Firms in financial distress would

Select one:

a.reject a project with positive NPV because shareholders have a lot to gain but very little to lose from the project.

b.accept a project with negative NPV because shareholders have something to gain but nothing to lose from the project.

c.reject a project with positive NPV because this is in the best interest of bondholders.