Answers13 - c 1. a. b. c. d. e. 2. a. b. c. d. e. The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
c 1. The return that lenders require on their loaned funds to the firm is called the: a. coupon rate. b. current yield. c. cost of debt. d. capital gains yield. e. cost of capital. e 2. The weighted average of the firm’s costs of equity, preferred stock, and aftertax debt is the: a. reward to risk ratio for the firm. b. expected capital gains yield for the stock. c. expected capital gains yield for the firm. d. portfolio beta for the firm. e. weighted average cost of capital (WACC). d 3. The after-tax cost of debt generally increases when: I. a firm’s bond rating increases. II. the market rate of interest increases. III. tax rates decrease. IV. bond prices decline. a. I and III only b. II and III only c. I, II, and III only d. II, III, and IV only e. I, II, III, and IV a 4. The cost of preferred stock: a. is equal to the dividend yield on the stock. b. is equal to the yield to maturity. c. is highly dependent on the growth rate. d. varies directly with the stock’s price. e. is difficult to determine. c 5. Your firm uses both preferred and common stock as well as long-term debt to finance its operations. Which one of the following will increase the capital structure weight
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/15/2008 for the course ACC 501 504 taught by Professor Na during the Spring '08 term at University of Texas.

Page1 / 3

Answers13 - c 1. a. b. c. d. e. 2. a. b. c. d. e. The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online