Author Question: Alberta Banks long-term bonds are currently priced to offer a yield-to-maturity of 11.3%. If Alberta ... (Read 37 times)

gjjjjjdkkkkk3k3k33k · **on:** Aug 7, 2023

Question 1

ABC Canada pays a $3.30 dividend on its preferred shares. If the price of its preferred shares is $51 and flotation costs would be 6% per share, what is the required rate of return on ABC’s preferred shares?

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5.13%

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5.78%

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6.20%

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6.88%

Question 2

Alberta Bank’s long-term bonds are currently priced to offer a yield-to-maturity of 11.3%. If Alberta Bank’s marginal tax rate is 33%, what is the after-tax cost of debt on Alberta Bank’s bonds?

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7.13%

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7.57%

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8.18%

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8.69%

risolinick@gmail.com · **Reply #1 on:** Aug 7, 2023

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