A portfolio conssts of 275 shares of Stock C that seilsfor $52 and 240 shares of Stock D that sells for $23. What is the portfol
1 answer:
Answer:
c. 7215
Explanation:
Number of shares of Stock C = 275
Value of Stock C = $52
Number of shares of Stock D = 240
Value of Stock D = $23
The weight of stock of a given stock is defined by the total value of the stock divided by the total value of the portfolio. For stock C:
The weight of of Stock C is 0.7215 or 72.15%.
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Answer:
The correct answer is 4.33%(approx)
Explanation:
According to the scenario, the given data are as follows:\
Face value = $1,000
Market price = $1,278.41
Coupon Rate = 11%
So Coupon Payment = $110
Years to maturity = 10 years
So, we can calculate the after tax cost of debt by using following method:
After Tax Cost of Debt = YTM × ( 1 - Rate of Tax)
Where, YTM =
So, by putting the following value, we get
YTM = 0.0721
So by putting the value in formula, we get
After Tax Cost of Debt = 0.0721 × ( 1 - 0.4)
= 4.33% (approx)