Considered cost of financial distress

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1. The duration of a $400 million portfolio is 18 years. $100 million in new securities are added to the portfolio, increasing the duration of the portfolio to 18.5 years. What is the duration of the 100 million in new securities?

20.5 years

20 years

16 years

18 years

2. Seattle's Best has a 15.23 percent profit margin and a 55 percent dividend payout ratio. The asset turnover ratio is 1.25 and the assets-to-equity ratio (using beginning-of-period equity) is 1.50. What is Seattle's Best's sustainable rate of growth?

15.71%

11.20%

12.85%

16.73%

10.20%

3. Which of the following would not be considered a cost of financial distress?

Loss of customers or suppliers

Bankruptcy costs

Lack of interest tax shields

Excessive risk-taking by shareholders

Reference no: EM132057589

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