Use TheUse the Firm Has Only Been Listed on the Stock

question 24

Multiple Choice

Use theUse the firm has only been listed on the stock exchange for a short time,you do not have an accurate assessment of Nielson's equity beta.However,you do have the following data for another firm in the same industry: Nielson has a much lower debt-equity ratio of .5,which is expected to remain stable,and Nielson's debt is risk free.Nielson's corporate tax rate is 21%,the risk-free rate is 5%,and the expected return on the market portfolio is 10%.
-Nielson's estimated equity beta is closest to:

• A)0.95.
• B)1.00.
• C)1.25.
• D)1.45.

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Definitions:

Peripartum

Relating to the period immediately before and after childbirth.

Catatonic Depression

is a subtype of depression characterized by significant psychomotor disturbances, which may include motoric immobility or excessive, purposeless activity.

Major Depressive Episode

A period characterized by severely depressed mood or loss of interest in activities, along with other symptoms such as significant weight change, sleep disturbances, and feelings of worthlessness, lasting at least two weeks.

Seasonal Disorder

A type of depression related to changes in seasons, often worsening during certain times of the year.