The XYZ company has its debts guaranteed by the U.S. government and so has no financial distress costs). The yield to maturity on its bonds is 6.47%, while the current yield on the bonds is 7.22% and the coupon rate is 6.87%. The tax rate is 21%. What is the after-tax cost of debt for this company? A. 7.22% B. 6.87% C. 6.47% D. 5.11% E. 1.36% If the real rate of return promised by the U.S. government is currently 0.11%, while fixed-rate U.S.
Treasury bonds have yields to maturity of 1.47%, what is the market consensus forecast of inflation? A. 1.58% B. 1.47% C. 1.36% D. 0.11% E. -1.47% Pig Markets, Inc., has a 6.75 percent coupon bond outstanding that matures in 10.5 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 7.2 percent? A. $899.80 B. $899.85 C. $903.42 D. S967.24 E. $1,007.52 What is the beta of the following portfolio? Stock Security Beta Amount Invested $6,700 1.41 $3,000 1.23 $8,500 0.79 A..95 B. 1.01 C. 1.05 D. 1.09 E. 1.23
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