Question # 6

e. 5.21%; EAR-5.1256 UESTION 5 9. Based on the CAPM, if the risk-free rate increases, the expected return of a stock with a beta of 0 does not change. a. True b. False QUESTION 6 coemponent cost of debt that is used in the WACC calculation a. 6.40% b, 4.03% c.568% 6.04% QUESTION 7 Tre ny bills have a return rate of2.00% and the market portfolio has a rem of 4,There are two stocks you are considering to by:Stock A and B Stock A has a beta ofa9 and Stock B has a beta of37 a. 35.7% higher expected return. b. 392% lower expected return. C c392% higher expected return. d. 363% higher expected return. e. 3.5% lower expected return. QUESTION 8 debt is 105. The pe mal capital structure is 35% common stock, 35% pret mod stock and 30% of International Group's cost of retained earnings is 9%, cost of preferred stock is 41% and its cost of debt. The firm will not be issuing any new stock and the marginal tax rate is 35% what is the weighted average cong