3. The beta of stock Golden is 1.25. The risk free rate of interest is 2.5% and the expected return on the market is 10%. According to the capital asset pricing model, which of the following comes closest to the expected return of Golden?
A. 12.37%
B. 13.12%
C. 14.25%
D. 11.88%
4. Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent. The firm has 6,000 shares of 7 percent preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The company also has 350 corporate bonds, each with $1000 par value, and the bond currently sells for 102 percent of face. The yield-to-maturity on the debt is 8.49 percent.
What is the capital structure weight of the firm's common stock?
A. 75.36%
B. 55.25%
C. 48.16%
D. 67.02%
PLEASE ANSWER ALL QUESTIONS
3. The beta of stock Golden is 1.25. The risk free rate of interest is 2.5% and the expected return on the market is 10%. According to the capital asset pricing model, which of the following comes closest to the expected return of Golden?
A. 12.37%
B. 13.12%
C. 14.25%
D. 11.88%
4. Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent. The firm has 6,000 shares of 7 percent preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The company also has 350 corporate bonds, each with $1000 par value, and the bond currently sells for 102 percent of face. The yield-to-maturity on the debt is 8.49 percent.
What is the capital structure weight of the firm's common stock?
| A. | 75.36% | |
| B. | 55.25% | |
| C. | 48.16% | |
| D. | 67.02% |
PLEASE ANSWER ALL QUESTIONS
