Exhibit 5-2

question 67

Multiple Choice

Exhibit 5-2.Consider the following cumulative distribution function for the discrete random variable X. Refer to Exhibit 5-2.What is the probability that X is greater than 2?

• A)0.14
• B)0.30
• C)0.44
• D)0.56

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Definitions:

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and is often used to assess the cost of a company’s financing through equity issuance.

Coupon Rate

Each year's interest rate on a bond displayed as a percentage of the bond's face value.

Cost of Capital

The minimum earnings rate a corporation must achieve on its projects to sustain its market valuation and draw in investments.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax deductions obtained on interest payments.