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1. The risk free rate of return is 2.5% and the market return is 8%. Rogue Transport has a beta of 2.2 and a standard deviation of returns of 28%. Rogue Transport's marginal tax rate is 35%. Analysts expect Rogue Transport's dividends to grow by 6% per year for the foreseeable future. Using the capital asset pricing model, what is Rogue Transport's cost of retained earnings?
a. 17.7%
b. 19.6%
c. 14.6%
d. 16.4%
2. Which of the following should NOT be considered when calculating a firm's WACC?
a. cost of newly issued preferred stock
b. after-tax cost of accounts payable
c. cost of newly issued common stock
d. after-tax YTM on a firm's bonds
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Which of the following is true of risk aversion?
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Suppose your company needs to raise $48 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 6 percent, and you’re evaluating two issue alternatives: Calculate the aftertax cash flows for..
The stocks of Microsoft and Apple have a correlation coefficient of 0.6. The variance of Microsoft stock is 0.4 and the variance of Apple stock is 0.3. What is the covariance between the two stocks?
Steve is about to retire and wants to calculate the total worth of his retirement assets. He has a corporate pension paying $2250 at the beginning of every month. He is also entitled for Social Security benefits of $1450 at the beginning of every mon..
foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is
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