1. Given the inherent tax shield advantages why might we still come across 100% Equity financed firms?
2. Why is it not common to see firms with extremely large debt components in their capital structure?
3. Given that debt financing is usually cheaper than equity financing, why do firms use some equity financing?
4. A stock has a beta of 1.3, the expected return on the market is 10 percent, and the risk-free rate is 5.0 percent. The expected return on this stock must be ______ percent.