Question: a) Which security has the highest systematic risk? Explain. Standard Beta Deviation Security X 0.35 1.45 Security 0.28 1.06 Security 2 0.44 1.22 b) A

a) Which security has the highest systematic risk? Explain. Standard Beta Deviation Security X 0.35 1.45 Security 0.28 1.06 Security 2 0.44 1.22 b) A firm finances its projects with 45% common stock, 15% preferred stock, and 40% debt, The firm has a 34% marginal tax rate. The cost of equity is 9%, the cost of preferred is 8%, and the cost of debt is 7%. What is the WACC? I c) XYZ Inc. has decided upon its target debt/equity ratio to be 0.6. The financial manager is calculating the cost of capital based on this target capital structure. If the company has a bond with 15 years to maturity, a semi-annual coupon rate of 6%, a par value of $1,000 Test Pred

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