1. What are the market imperfections/costs that cause the first proposition of M&M to fail in supermarkets?
2. Royal Jewelers Inc. has an aftertax cost of debt of 7 percent. With a tax rate of 35 percent, what can you assume the yield on the debt is? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Yield %_____
3. How can deposit insurance lead to more systematic risk in the banking system?