A Firm Has 2 Million Common Shares Outstanding, Which Are

question 35

Multiple Choice

A firm has 2 million common shares outstanding, which are currently trading at $45 per share and have a dividend yield of 10%.The firm also has $40 million of 6% bonds outstanding that are currently trading at 110, with a yield to maturity of 3%.There are no preferred shares and no income taxes.Based on this information what is the WACC?

• A)7.70%
• B)7.85%
• C)8.69%
• D)8.77%

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Definitions:

Emotional Regulation

Techniques for controlling one’s emotional states.

Negative Emotionality

Characterizes individuals who frequently experience and express negative emotions such as anger, anxiety, or sadness.

Stranger Anxiety

A fear of unfamiliar people that emerges between 6 and 9 months of age. Also called fear of strangers.

Self-Concept

An individual's perception of self, encompassing beliefs, attributes, and who and what the self is.