Arrow bank has deposits of $800 million. it holds reserves of $40 million and
government bonds worth $100 million. if the bank sells its loans at market value of
$500 million, what will its total assets equal?
o $140 million
$540 million
o $640 million
o $800 million

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.