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NEW QUESTION: 1
Assume the following facts about Martin Corporation:
. The long-term debt was originally issued at par ($1,000/bond) and is currently trading at $1,250 per
bond.
. Martin Corporation can now issue debt at 150 basis points over U.S. treasury bonds.
. The current risk-free rate (U.S. treasury bonds) is 7 percent.
. Martin's common stock is currently selling at $32 per share.
. The expected market return is currently 15 percent.
. The beta value for Martin is 1.25.
. Martin's effective corporate income tax rate is 40 percent.
Based on these assumptions, what is the current net after-tax cost of debt for Martin Corporation?
A. 5.5 percent.
B. 5.1 percent.
C. 8.5 percent.
D. 7.0 percent.
Answer: B
Explanation:
Choice "c" is correct. 5.1 percent current net cost of debt.
The fact pattern states that debt can be currently secured at 150 basis points above the Treasury bond
rate. A basis point is equal to 1/100 of 1% (1% of 1%).
Applying the decimals it's:
1 50 basis points x 1/100 of 1% (or .0001)
this yields .015 or 1.5%
Add the additional basis points converted to percentage (1.5%) to the Treasury bond rate of 7% to arrive
at the pre-tax debt cost of 8.5%. Apply 1 - tax rate to arrive at the current net cost of debt as follows:

NEW QUESTION: 2
Which NetScaler mode is commonly referred to as 'inline mode'?
A. Use Source IP (USIP)
B. One-Arm Mode
C. Two-Arm Mode
D. MAC-based Forwarding
Answer: C

NEW QUESTION: 3
A risk practitioner is reviewing a vendor contract and finds there is no clause to control privileged access to the organization's systems by vendor employees. Which of the following is the risk practitioner's BEST course of action?
A. Contact the control owner to determine if a gap in controls exists.
B. Document this concern as a threat and conduct an impact analysis.
C. Report this concern to the contracts department for further action.
D. Add this concern to the risk register and highlight it for management review.
Answer: C