Use the Following Information to Answer the Question(s) Below

question 42

Multiple Choice

Use the following information to answer the question(s) below

Assume that the risk-free rate of interest is 3% and you estimate the market's expected return to be 9%.
-Which firm has the highest cost of equity capital?

• A)Eenie
• B)Meenie
• C)Miney
• D)Moe

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Definitions:

Quoted Price

The last price at which a security or commodity traded, often used as a reference to gauge market value.

Current Yield

The annual income (interest or dividends) divided by the current price of the security.

Semiannually

Occurring twice a year; typically every six months.

Subordinated Debt

A class of debt that is ranked below other debts with regard to claims on assets or earnings in the event of a liquidation of the issuer.