Product companies normally have marketing plans for specific products or services

Short-term mutual funds invest solely in tax-exempt securities.

a. true b. false

Initech has 7 million shares of common stock outstanding and 50,000 bonds outstanding. The bonds pay semi-annual coupons at an annual rate of 9.05%, have 6 years to maturity and a face value of $1,000 each

The common stock currently sells for $30 a share and has a beta of 1. The bonds sell for 94% of face value and have a 10.42% yield to maturity. The market risk premium is 5.5%, T-bills are yielding 5% and the tax rate is 30%. What is the firm's capital structure weight for debt? A) 18.3% B) 19.3% C) 20.3% D) 21.3% E) 22.3%