Texas co. issued a 20-year fixed-rate bonds denominated in japanese yen to take advantage of the low interest rate in japan, even though it has no cash flows in yen. the actual financing cost of those bonds to texas co. will increase if . interest rate in japan rises over time. b. interest rate in japan decreases over time. c. yen appreciates against the dollar. d. yen depreciates against the dollar.

The common stock and debt of northern sludge are valued at $65 million and $35 million, respectively. investors currently require a return of 15.9% on the common stock and a return of 7.8% on the debt. if northern sludge issues an additional $14 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the interest rate on northern’s debt and that there are no taxes.