Author Question: Good advice is to buy stocks with positive alpha values. Indicate whether the statement is true ... (Read 137 times)

lbcchick · **on:** Jul 10, 2018

Good advice is to buy stocks with positive alpha values.

Indicate whether the statement is true or false

Question 2

Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing
new 15-year, 1,000 par, 9 annual coupon bonds. The market price of the bonds is 1,070 each.

Crandal's flotation expense on the new bonds will be 50 per bond. Crandal's marginal tax rate is
35. What is the pre-tax cost of debt for the newly-issued bonds?
A) 10.25 B) 8.76 C) 7.49 D) 8.12