$31$:$46$

Time Remaining

$6$

Multiple Choice

$1$ point

Why might a firm issue different classes of stock? In order to:

fool investors.

distinguish the time periods in which the various shares were issued.

reduce the firm's dividend obligation.

allow a certain group to maintain ownership control while reducing that group's equity position.

extract perquisites from one class of shareholders without the other class of shareholders knowing.

$7$

Multiple Choice

$1$ point

The weighted average cost of capital for a firm is the:

rate of return that the firm's preferred stockholders should expect to earn over the long term.

maximum rate that the firm should require on any projects it undertakes.

discount rate that the firm should apply to all the projects it undertakes.

rate the firm should expect to pay on its next bond issue.

overall rate that the firm must earn on its existing assets to maintain the value of its stock.

$8$

Multiple Choice $1$ point

Galvatron Metals has a bond outstanding with a coupon rate of $6\mathrm{.}7$ percent and semiannual payments. The bond cur