A Firm Has Debt Beta of 0

question 59

Multiple Choice

A firm has debt beta of 0.2 and an asset beta of 1.9. If the debt-equity ratio is 75 percent, what is the levered equity beta?

• A)1.90
• B)3.18
• C)2.42
• D)2.63

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Definitions:

Rational Basis Review

A standard of judicial review that examines if a law or governmental action is rationally related to a legitimate government interest.

Minimum Age

The lowest legal age at which an individual is allowed to partake in certain activities or assume particular responsibilities.

Grandfather Clause

A provision in which an old rule continues to apply to some existing situations while a new rule will apply to all future cases, often used within laws to exempt certain individuals or practices from new regulations.

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