The cost of preferred stock:
Answer: is equal to the dividend yield.
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FIN3403
- If the risk-free rate is 4 percent, an all-equity firm's beat is 2, and the market risk premium is 6 percent, what is the firm's cost of capital?
- Suppose the risk-free rate is 5%, the market rate of return is 10%, and beta is 2%. Find the required rate of return using CAPM.
- MNO preferred stocks pays dividend of $2 per year and gas a price of $20. If MNO's tax rate is 40%, the Aftertax rate of return om its preferred stock is:
- According to the CAPM, what is the expected return on a stock if its beat is equal to zero?
- Other companies that specialize only in projects similar to the project your firm is considering are called ______.
- If an analyst's forecast for a firm's earnings growth is 7 percent, and its dividend yield is 3 percent, its cost of equity will be ______.
- Which of the following is Tax-deductible to the firm?
- Suppose the risk-free rate is 5.5%, the market rate of return is 8.5%, and beta is 1.25%. Find the required rate of return using CAPM.
- The cost of capital primarily on the _______ of funds, NOT the ______.
- A company has a borrowing rate of 15 percent and a tax rate of of 30 percent. What is its aftertax cost of debt?
- Some risk adjustment to a firm's WACC for projects of differing risk, even if it is subjective, is probably?
- To estimate the dividend yield of a particular stock, we need?
- Finding a firm's overall cost of equity is difficult because:
- The rate to discount project cash flows is known as the ____?
- The following are DIS-ADVANTAGES of the SML approach?
- The following are ADVANTAGES of the SML approach?
- If a firm uses its overall cost of capital to discount cash flows from projects in HIGHER RISK divisions, it will accept_______ projects.
- The WACC is the minimum required return for ______.
- If a firm issues no debt, its average cost of capital will equal _____?
- The return an investor in a security received is _______, _______ the cost of the security to the company that issued it.
- Preferred stock ________?
- The growth rate of dividends can be found using:
- What is the required return on stock (Re), according to the constant dividend growth model, if the growth rate (g) is zero?
- If an ALL_EQUITY firm discounts a project's cash flows with the form's overall weighted average cost capital even though the project's beta is less than the form's overall beat, it is possible that the project might be:
- Suppose a firm's capital structure consists of 30% debt, 10% preferred stock and 60% equity. the form's bond yield 10% on average before taxes, the cost preferred stock is 8% and the cost of equity is 16%. Calculate the form's WACC assuming a tax rate of 40%.
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