Question: Gustav Corporation has 9.5 million shares of common stock outstanding. The current share price is $60, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million and a coupon rate of 9 percent and sells for 106.3 percent of par. The second issue has a face value of $70 million and a coupon rate of 8 percent and sells for 107 percent per par. The first issue matures in 6 years, the second in 25 years.
What are Gustav Corporation's capital structure weights on book value basis?
What are Gustav's capital structure weights on a market value basis?
Which are more relevant, the book or market value weights? Why?