Questions from Corporate Finance

Q: A stock has an expected return of 10.45 percent,

A stock has an expected return of 10.45 percent, its beta is .85, and the expected return on the market is 11.8 percent. What must the risk-free rate be?

Q: What are the portfolio weights for a portfolio that has 145 shares

What are the portfolio weights for a portfolio that has 145 shares of Stock A that sell for $47 per share and 200 shares of Stock B that sell for $21 per share?

Q: You own a portfolio that has $4,450 invested in

You own a portfolio that has $4,450 invested in Stock A and $9,680 invested in Stock B. If the expected returns on these stocks are 8 percent and 11 percent, respectively, what is the expected return...

Q: You own a portfolio that is invested 15 percent in Stock X

You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, resp...

Q: You have $10,000 to invest in a stock portfolio

You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 12.4 percent and Stock Y with an expected return of 10.1 percent. If your goal is to create a portf...

Q: Lingenburger Cheese Corporation has 6.4 million shares of common stock

Lingenburger Cheese Corporation has 6.4 million shares of common stock outstanding, 200,000 shares of 3.8 percent preferred stock outstanding, par value of $100, and 120,000 bonds with a semiannual co...

Q: In the aggregate, debt offerings are much more common than equity

In the aggregate, debt offerings are much more common than equity offerings and typically much larger as well. Why?

Q: Why are the costs of selling equity so much larger than the

Why are the costs of selling equity so much larger than the costs of selling debt? Answer: From the previous question, economies of scale are part of the answer. Beyond this, debt issues are ea...

Q: Why do noninvestment-grade bonds have much higher direct costs than

Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues?

Q: Why is underpricing not a great concern with bond offerings? Use

Why is underpricing not a great concern with bond offerings? Use the following information to answer the next three questions. Zipcar, the car-sharing company, went public in April 2011. Assisted by t...