86 . Jeffery Marian, an analyst with Arlington Machinery, is estimating a country risk premium to include in his estimate of the cost of equity for a project Arlington is starting in India. Marian has compiled the following information for his analysis:
§ Indian 10-year government bond yield = 7.20%
§ 10-year U.S. Treasury bond yield = 4.60%
§ Annualized standard deviation of the Bombay Sensex stock index = 40%.
§ Annualized standard deviation of Indian dollar denominated 10-year government bond = 24%
§ Annualized standard deviation of the S&P 500 Index = 18%.
The estimated country risk premium for India based on Marian’s research is closest to:
A) 2.6%.
B) 4.3%.
C) 5.8%.
87 . A firm expects to produce 200,000 units of flour that can be sold for $3.00 per bag. The variable costs per unit are $2.00, the fixed costs are $75,000, and interest expense is $25,000. The degree of operating leverage (DOL) and the degree of total leverage (DTL) is closest to:
DOL DTL
A) 1.6 2.0
B) 1.3 1.3
C) 1.6 1.3
88. Assume that a company has equal amounts of debt, common stock, and preferred stock. An increase in the corporate tax rate of a firm will cause its weighted average cost of capital (WACC) to:
A) rise.
B) more information is needed.
C) fall.
89 . The uncertainty in return on assets due to the nature of a firm’s operations is known as:
A) business risk.
B) financial leverage.
C) tax efficiency.
90 . Which yield measure is the most appropriate for comparing a company’s investments in short-term securities?
A) Money market yield.
B) Discount basis yield.
C) Bond equivalent yield.
扫一扫微信，*9时间获取2014年CFA考试报名时间和考试时间提醒
写评论
