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Author Question: Which of the following is NOT a definition of yield to maturity? A) investors' required rate of ... (Read 42 times)

jazziefee

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Which of the following is NOT a definition of yield to maturity?
 
  A) investors' required rate of return on a bond investment.
  B) discount rate that equates present value of future cash flows with a bond's price.
  C) return that an investor will earn if they buy the bond for its market price and hold it until
  maturity.
  D) discount rate that equates present value of future cash flows with a bond's face value.

Question 2

Alarm Systems Corporation's preferred stock pays a dividend of 3.60 and sells for 28.00. Alarm Systems
  Corporation has a marginal tax rate of 35. What is the cost of preferred financing?
 
  What will be an ideal response?



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anoriega3

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Answer to Question 1

D

Answer to Question 2

3.60/28 = .12857 =12.857





 

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