-The yield to maturity (same as required rate of return) on a bond is .

a) below the coupon rate when the bond sells at a discount, and equal to the coupon rate

when the bond sells at a premium.

b) the discount rate that will set the present value of the payments equal to the bond

price.

c) based on the assumption that any payments received are reinvested at the prime rate.

d) none of the above.

e) a, b, and c.

-Hilton Corporation has 1 million shares of common stock outstanding and 80,000 bonds with 6% coupon at $1000 par each. The stock currently sells at $53 per share and has a beta of 1.15; the bonds have 25 years to maturity and sell at $1141. The market risk premium is 6.8% and Treasury bills are yielding 3.1%. If Hiltons corporate tax rate is 21%, what is the companys cost of capital (WACC)?