1. The Up and Coming Corporation's common stock has a beta of 0.9. If the risk-free rate is 4 percent and the expected return on the market is 15 percent, what is the company's cost of equity capital? (Do not round your intermediate calculations.)

13.2%

14.46%

17.5%

14.59%

13.9%

2. The Down and Out Co. just issued a dividend of $2.36 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

10.72%

5.12%

11%

10.45%

11.55%

3. You own the following portfolio of stocks. What is the portfolio weight of stock C?

Stock Number of Shares Price per Share
A 120 $29
B 720 $25
C 450 $49
D 220 $48
33.28 percent

52.80 percent

40.77 percent

59.23 percent

19.52 percent

4. Holdup Bank has an issue of preferred stock with a $10 stated dividend that just sold for $90 per share. What is the bank's cost of preferred stock?

11.67%

11.11%

10.00%

11.56%

10.67%

5. Stock in Country Road Industries has a beta of 0.72. The market risk premium is 10 percent, and T-bills are currently yielding 4 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 3.5 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

8.7%

11.2%

8.67%

9.94%

8.32%

6. The Auto Group has 1,000 bonds outstanding that are selling for $900 each. The company also has 8,900 shares of preferred stock at a market price of $45 each. The common stock is priced at $40 a share and there are 35,000 shares outstanding. What is the weight of the preferred stock as it relates to the firm's weighted average cost of capital?

7.42 percent

33.33 percent

14.83 percent

51.84 percent

29.66 percent

Please answer all questions.