Kim\'s Bridal Shoppe has 11,000 shares of common stock outstanding at a price of

Question

Kim's Bridal Shoppe has 11,000 shares of common stock outstanding at a price of $44 per share. It also has 255 shares of preferred stock outstanding at a price of $86 per share. There are 600 bonds outstanding that have a coupon rate of 6.3 percent paid semiannually. The bonds mature in 25 years, have a face value of $1,000, and sell at 106 percent of par. What is the capital structure weight of the common stock? .4238 .5063 .5570 .3751 .4376

15. You decide to invest in a portfolio consisting of 25 percent Stock A, 25 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio?

Stock C

Answers to choose from:

15.47%

13.09%

14.18%

12.54%

12.00%

State of Economy Probability Return if State Occurs Stock A Stock B

Stock C

Recession .16 -16.4 -2.71 -21.6 Normal .55 12.6 7.3 15.9 Boom .29 26.2 14.6 30.5

Explanation / Answer

Market valeu of common stock = 11,000 * 44 = $484,000

Market value of preferred stock = 255 * 86 = $21,930

Market value of debt = 600 * ( 1000 * 1.06) = $636,000

Total market value = 484,000 + 21,930 + 636,000 = 1,141,930

Weigth of common stock = 484,000 / 1,141,930 = 0.4238

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.