Question 6 (3.33 points) A firm has a bond with 22 years to maturity, and pays an annual coupon payment of 10%. The bond is currently selling for $1,094.42. When the company issues a new bond, there will be administrative costs and flotation costs estimated at $35 per bond. If the firm decides to issue new 20-year bonds today with annual coupon payments, what would be the effective cost of the new bonds (pre-tax)? 1) 9.39% 2) 10.19% 3) 10.87% 4) 11.05% Question 7 (3.33 points) A firm has preferred stocks outstanding. If the preferred stock is selling at $34 and the preferred dividend is $3.5 a year, what is the cost of the preferred stock? 1) 9.45% O2) 10.29% 3) 10.87% 4) 13.5% Question 8 (3.33 points) You sold 100 put for $6, bought 120 put for $14, commission $2. Your Maximum gain is: 1) $8 2) $2 3) $14 4) unlimited