How performance and risk are different across stocks

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1. Discuss how performance and risk (mean and standard deviation) are different across stocks, short-term government bonds, and long-term government bonds.

2. David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.23%. What is the company's cost of equity capital? Round your answer to two decimal places. _______%.

Reference no: EM131839756

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