Reference no: EM132811242

Problem 1: Working capital management refers to:

Select one:

a. The types of long-term investments made.

b. The types of stock issued.

c. The levels of cash and inventory held.

d. The mixture of debt and equity.

e. The amount of long-term debt.

Problem 2: Bobby's Inc. has a $1 million bond issue outstanding that is selling at 101.3 % of face value. Bobby's also has 25,000 shares of preferred stock and 450,000 shares of common stock outstanding. The preferred stock has a market price of $36 a share compared to a price of $24 a share for the common stock. What is the weight of the debt as it relates to the firm's weighted average cost of capital?

Select one:

a. 7.97 %

b. 8.04 %

c. 7.78 %

d. 8.11 %

e. 8.63 %