What is the WACC

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Q1) TBQ has a market capitalization of $10 million, and $2.5 million in outstanding debt. Suppose their beta is 1.20, the risk-free rate is 2%, and the expected return of the market is 8%. TBQ's debt cost of capital is 6% and their corporate tax rate is 40%. What is the WACC?

a. 3.6%

b. 6%

c.7.8%

d. 9.2%

e. 10.2%

Q2) The difference between a stock's expected return and its required return is called the stock's ___________.

a. Historical Return.

b. Geometric Return.

c. Beta.

d. Alpha.

e. Volatility.

Q3) The size effect says that _______ market capitalization stocks have historically earned higher average returns than the market portfolio.

a. Global

b. Small

c. Large

d. Medium

e. Debt-Free

Reference no: EM132845578

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