1. A company has 1,000,000 shares of common stock outstanding and its stock is currently trading at $50 per share. The firm also has 20,000 bonds outstanding. The bonds are quoted at 116%(?) of face value. What weight should we use for the debt in order to compute the firm's WACC?
a. 27.5%
b. 31.7%
c. 29.2%
d. 33.9%
e. 36.3%
2. Why does Shapiro argue that board members should not be outsiders?
A-Outsiders would be easily manipulated by the CEO
B-Outsiders would be more impartial
C- Outsiders might sell the company out to another company
D- Outsiders might have conflicts of interest