Rizqi Ghani Faturrahman

29120382
MBA ITB
1. What is the implication of a low value of beta?
Answer:
Insensitivity to the broad market
2. How would you best define the concept of capital structure in finance?
Answer:
A mix of debt and owner investment
3. If Astra Containers became a publicly traded company, it could more easily raise capital. What
would be the disadvantages?
Answer:
Increased regulation, loss of control, and shorter time horizons
4. How are risk and return related?
Answer:
Lower Risk implies low return, and high return implies high risk
6. The public debt of Astra Containers would be held in ______ bonds
Answer:
Corporate
7. Which type of payment is most easily adjusted to accommodate circumstances?
Answer:
Dividend
8. Thierry owns stock in two companies in the United States. The first has a beta of 0.73, and the
second has a beta of 1.48. What is the difference in expected rates of return for the two
companies?
Answer:
4.5 Percent
9. Why do equity investors require a higher return than lenders?
Answer:
Investors can accept higher risk.
10. From the discussion of the definition of beta, identify the market category that would have the
highest beta.
Answer:
Luxury goods
11. Which payment scheme would have the largest present value?
Answer:
A payment of $100,000 at the end of this year
12. Astra Containers is seeking to borrow $45 million at an interest rate of 6 percent. Astra will
raise an additional $30 million through equity investment, returning 10 percent. What is the
WACC?
Answer:
7.6 percent
13. If the inflation rate is about 7 percent, then what would you expect the risk-free rate to be?
Answer:
15 percent