In a CAPM world an investor should not earn any return for bearing firm-specific risk. This is because_____________________________________.         Which of the phrases below best completes the above sentence?

The interest rate that reflects what banks are charged by other banks when they borrow to meet their reserve requirements is called:    

The following questions are short answer.  Please do not write more than a few sentences for any one question, and feel free to use bullet points when possible.

Which of the following items will NOT be included in the bond indenture?

You currently own stock in SUU International, which just paid a dividend of 1.25 per share.  You expect to hold the stock for the next three years at which time you will sell it.  If their dividend grows at 4% annually, and the required return on this stock is 9%, what will be the price of this stock when you sell it in three years?

Acme Magnets stock is selling for $100 today.  It is expected that the company will pay a dividend of 5 dollars per share over the next year, and it will then be sold for $120 in exactly one year.  What is the expected total return for the shareholders on this stock?

Mike Whizowski Motors issued one million shares of preferred stock that pays a dividend of $2.00 per year.  If the required rate of return on their stock is 10%, how much money were they able to raise?

Using the book values for your firm, what is the weight of debt for Textron in January of 2007?

You are evaluating the required return of General Motors, and are looking at the various operational and costs risks they face.  Which of the following is an example of a systematic (non-diversifiable) risk?

E(rp) = wa * E(ra) + wb * E(rb) + … + wn * E(rn) R = E(r) – Rf  (Excess return = expected return minus risk free rate)