QUESTIONS 69 THROUGH 78 RELATE TO CORPORATE FINANCE

74. A twenty-year $1,000 fixed rate non-callable bond with 8% annual coupons currently sells for

$1,105.94. Assuming a 30% marginal tax rate and an additional risk premium for equity relative

to debt of 5%, the cost of equity using the bond-yield-plus-risk-premium approach is closest to:

A. 9.9%.

B. 12.0%.

C. 13.0%.

By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-

registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The

following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting

access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing,

distributing and/or reprinting the mock exam for any purpose.