1. If the U.S. government announces that it will borrow an additional $400 billion, this announcement will normally cause bond traders to expect?
a. ?lower interest rates in the future, and they will sell bonds now.
b. ?higher interest rates in the future, and they will buy bonds now.
c. ?higher interest rates in the future, and they will sell bonds now.
d. ?lower interest rates in the future, and they will buy bonds now.
e. ?stable interest rates in the future, and they will buy bonds now.
2. A firm's stock is selling for $60. The next annual dividend is expected to be $3.00. The growth rate is 4%. The flotation cost is $5.00. What is the cost of common stock
a 9.45%
b 9%
c 10.25%
d 8.75%