can someone finish all , cuz i don\'t have enough questions remaining. 15. Rank

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can someone finish all , cuz i don't have enough questions remaining.

15. Rank the following groups from first to last to be paid in a bankruptcy:

I.   Common Stockholders

II. Bondholders

III. Employees

III, II, I

II, III, I

I, II, III

I, III, II

III, I, II

16. If long term corporate bonds have been earning an average of 6.25% over the past 10 years, and the risk free rate is 3.81%, what is the risk premium?

a. 3.81%

b. 2.44%

c. 13.95%

d. 6.25%

e. 10.06%

17. You own a portfolio that has $1,200 in Stock A and $1,900 in Stock B. If the expected returns on the two stocks are 9% and 11%, respectively, what is the expected return on the portfolio?

a. 10.22%

b. 11.44%

c. 10%

d. 8.89%

e. 9.23%

18. The value of the firm is MAXIMIZED when

a. the WACC is minimized.

b. interest rates are expected to increase

c. equity markets are depressed

d. the firm has mostly equity in its capital structure

e. WACC is maximized

19. The difference between the WACC formula and the WAFC formula is

a. WACC uses preferred stock as the middle part.

b. WAFC does not have the tax break on debt.

c. WACC uses smaller numbers than WAFC.

d. The portfolio weights on WACC have to total to one, but not on WAFC.

e. WAFC combines common and preferred, but WACC accounts for them separately.

20. Rank the following from first to last as guidelines for the Compromise Dividend Policy:

I.    Avoid cutting the dividend

II.   Maintain a target debt/equity ratio.

III.   Avoid rejecting positive NPV projects in order to pay a dividend.

III, II, I

I, III, II

III, I, II

II, III, I

II, I, III

Explanation / Answer

15)

1, 2, 3

16)

Risk premium = 6.25 - 3.81 = 2.44%

17)

Expected return = (1200 / 3100) * 0.09 + ( 1900 / 3100) * 0.11

Expected return = 0.3871 * 0.09 + 0.6129 * 0.11

Expected return = 0.034839 + 0.067419

Expected return = 10.22%

18)

The WACC is minimised

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