A Firm Has 1,000,000 Shares of Common Stock Outstanding, Each

question 92

Multiple Choice

A firm has 1,000,000 shares of common stock outstanding, each with a market price of $10.00 per share. It has 15,000 bonds outstanding, each selling for $900 (with a face value of $1,000) . The bonds mature in 15 years, have a coupon rate of 10%, and pay coupons semi-annually. The firm's equity has a beta of 1.5, and the expected market return is 20%. The tax rate is 35% and the WACC is 16%. What is the risk-free rate?

• A) 4.8%
• B) 11.4%
• C) 27.6%
• D) 30.0%

---

Definitions:

Borderline Personality Disorder

is a mental health disorder characterized by unstable moods, behavior, and relationships, often resulting from early relationships and experiences.

Dependent Personality Disorder

A mental health condition characterized by a pervasive and excessive need to be taken care of, leading to submissive and clinging behavior.

Subordinate Social Status

Pertains to individuals or groups that are perceived as lower in rank, value, or importance in a social hierarchy.

Obsessive-Compulsive Personality

A personality disorder characterized by a preoccupation with orderliness, perfectionism, and control, at the expense of flexibility, openness, and efficiency.