FIN 370 Final Exam Homework | Page 5

Suppose that Model Nails , Inc .’ s capital structure features 60 percent equity , 40 percent debt , and that its before-tax cost of debt is 6 percent , while its cost of equity is 10 percent . If the appropriate weighted average tax rate is 28 percent , what will be Model Nails ’ WACC ?
​7.73 percent ​8.40 percent ​8.00 percent ​16.00 percent
We commonly measure the risk-return relationship using which of the following ? ​Coefficient of variation ​Standard deviation ​Expected returns ​Correlation coefficient
Financial plans include which of the following ?
​Schedule of Sales , Expenses , and Capital Expenditure ​All of the above ​Short Term and Long Term Plan ​Pro forma Income Statement , Balance Sheet
Which of the following terms means that during periods when interest rates change substantially , bondholders experience distinct gains and losses in their bond investments ?
​Interest rate risk ​Credit quality risk ​Reinvestment rate risk ​Liquidity rate risk
What are reasons for the firm to go abroad ?