1. When a company exchanges 100 shares of stock worth $10 each for 50 shares worth $20 each, they are using:

a.tracking stock

b. holding stock

c. an LBO

d. reverse stock split

e. split stock

2. If the weights for equity and debt and 50/50, what is the WACC for a company with a beta of 1.2 if the risk free rate is 3%, the expected return on the market is 10%, the yield to maturity on the company's debt is 7% and the tax rate is 40%?

9.2%

7.8%

10.5%

13.2%

8.8%