If we assume that the annual return on common stocks are normally distributed, then approximately 99% of the returns will fall within the range _______, if the average historical return is 13.0% with a standard deviation of 20.2%.

If you can consistently make abnormal profits using publicly available information, this would indicate that the semi-strong form of market efficiency holds.

What is the future value at the end of year 4 of the following set of cash flows? Assume an interest rate of 5%. Year                         1                  2                   3               4 Cash Flow            $1,000        -$1,000         $1,500      -$1,500

Suppose that your firm has a cost of equity of 18% and a cost of debt of 7%. If the target debt/equity ratio is 0.60, and the tax rate is 30%, what is the firm’s weighted average cost of capital (WACC) (note: do not round your intermediate calculations)?

Abaco Industries has junk bonds outstanding with an 8% coupon rate (APR) and a market price of $750. If the bonds mature in 4 years and interest is paid semi-annually, what is the YTM (as an APR) of those bonds?

According to ______, firms typically use internal financing before they use debt and equity financing from external markets.

Given the following information, what is the firm’s weighted average cost of capital? Market value of equity = $60 million; market value of debt = $20 million; cost of equity = 15%; cost of debt = 5%; equity beta = 3.1; tax rate = 35%.

You purchased a bond for $870 one year ago. Today, you receive your only interest payment for the year of $70. The bond can currently be sold for $950. What is your total percentage return on investment? Ignore tax effects.

A project requires an initial investment of $9 million. The target D/E ratio is 0.60. Flotation costs for equity are 7% and flotation costs for debt are 3%. What is the true cost (in dollars) of the project when you consider flotation costs?

Your required return is 14%. Should you accept a project with the following cash flows?                         Year                                 0                1                2                3                                   Cash Flow                     -$25           +$8            +$8           +$15