Filer Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $49, and

Question:

Filer Manufacturing has 7.5 million shares of outstanding. The current share price is $49, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a of $60 million and a 7 percent and sells for 93 percent of par. The second issue has a of $50 million and a 6.5 percent and sells for 96.5 percent of par. The first issue matures in 10 years, the second in 6 years.
a. What are Filer’s weights on a book value basis?
b. What are Filer’s weights on a market value basis?
c. Which are more relevant, the book or market value weights? Why?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...