1. Serial correlation: A. indicates a tendency for continuation when the correlation is negative. B. involves multiple securities within the same industry. C. measures the relationship between the current return on a security with that of a second security. D. supports weak form efficiency when the correlation coefficient is near zero. E. indicates a tendency toward reversal when the correlation coefficient is zero.
2. Lannister Manufacturing has a target debt−equity ratio of .60. Its cost of equity is 15 percent, and its cost of debt is 4 percent. If the tax rate is 35 percent, what is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %