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Use the Information for the Question(s) Below

question 89

Multiple Choice

Use the information for the question(s) below.
Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. With has 2 million shares outstanding and $12 million dollars in debt at an interest rate of 5%.
-Assume that MM's perfect capital markets conditions are met and that you can borrow and lend at the same 5% rate as with.You have $5000 of your own money to invest and you plan on buying Without stock.Using homemade leverage you borrow enough in your margin account so that the payoff of your margined purchase of Without stock will be the same as a $5000 investment in with stock.The number of shares of Without stock you purchased is closest to:

Definitions:

Cultural Relativism

The principle that an individual human's beliefs and activities should be understood by others in terms of that individual's own culture, rather than judging them by the standards of another culture.

Cultural Adaptation

The process by which individuals or groups adjust and acclimate to cultural differences, including values, norms, and behaviors, in new or changing environments.

Cultural Diffusion

The process by which cultural elements, such as beliefs, technologies, or practices, spread from one society or social group to another.

Cultural Innovation

The process by which new cultural practices, ideas, or objects are created, accepted, and integrated into a society.