20. A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they
ID: 2712097 • Letter: 2
Question
20. A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?
a) $450,000 b) $500,000 c) $1,000,000 d) $5,000,000
21. _____________ was passed in 2010 as a response to the Financial Crisis.
a)Bush-Cheney
b)Dodd-Frank
c)Glass-Steagall
d)Gramm-Bailey
22. Many people consider the he failure to save _____________ as the start of the financial crisis.
a)AIG
b)Goldman Sachs
c)Lehman Brothers
d)Merrill Lynch
23. Which statement is FALSE?
a)Debt levels rose the most in low income areas
b)People around the world were saving too much money
c)The Federal Reserve contributed to the housing bubble by keeping interest rates too low
d)The Strong Dollar attracted money from overseas
Explanation / Answer
20)
Maximum amount can be paid:
= $50,000,000×(10%-9%)
= $500,000
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