What is the dominant risk factor for investors

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Reference no: EM132058318

1. Contrail Air, Inc. is trying to determine its cost of debt. The company has an outstanding debt issue with 18 years to maturity that is quoted at 97.00% percent of face value. The issue makes semiannual payments and has a coupon rate of 10.00% percent. What is the pretax cost of debt?

Settlement: 01/01/2000

Maturity: 01/01/2018

Price (% of par ): 97

Coupon rate: 10%

Payments per year: 2

Tax rate: 34%

2. What is the dominant risk factor for investors who hold diversified portfolios of assets?

a) Beta

b) Coefficient of variation

c) Standard deviation

d) Correlation coefficient

Reference no: EM132058318

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