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Free CTP Exam Braindumps

Company XYZ has determined that its weighted average cost of capital is 12.5%. The capital structure of the company is made up of 75% equity and 25% debt. The before-tax cost of debt is 10%. Given a tax rate of 34%, what is XYZ's cost of common stock?

  1. 13.25%
  2. 14.47%
  3. 15.25%
  4. 16.53%

Answer(s): B



A company hires an investment firm to fully underwrite a new stock issuance. Which of the parties carries the MOST risk?

  1. The public
  2. The company
  3. The company’s bond holders
  4. The investment firm

Answer(s): D



Which of the following BEST describes an advantage of a company going public?

  1. Increased management control
  2. Increased public disclosure
  3. Increased managerial flexibility
  4. Increased liquidity

Answer(s): D



With respect to the Sarbanes-Oxley Act, a company may avoid additional reporting requirements by:

  1. issuing shares in an IPO.
  2. providing an SSAE 16.
  3. redeeming bond issues.
  4. delisting its securities.

Answer(s): D






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