Use the Information for the Question(s) Below

question 22

Multiple Choice

Use the information for the question(s) below.
Consider two firms, Firm X and Firm Y, that have identical assets that generate identical cash flows. Firm Y is an all-equity firm, with 1 million shares outstanding that trade for a price of $24 per share. Firm X has 2 million shares outstanding and $12 million 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 Firm X. You have $5,000 of your own money to invest and you plan on buying Firm X stock. Using homemade (un) leverage, how much do you need to invest at the risk-free rate so that the payoff of your account will be the same as a $5,000 investment in Firm Y stock?

• A) $5,000
• B) $0
• C) $2,500
• D) $4,000

---

Definitions:

Expressive Role

The societal expectation placed on individuals, usually women, to be caretakers, emotional supporters, and to maintain the cohesiveness of family life.

Prostitution

The practice or occupation of engaging in sexual activity with someone for payment.

Bank Teller Positions

Jobs at financial institutions that involve handling customer transactions, inquiries, and maintaining accounts, often serving as a primary point of contact.

Gendered Division of Labor

The allocation of different tasks, jobs, or responsibilities to individuals based on their gender, leading to inequalities in the workplace and other spheres of life.