Use TheUse the Firm Has Only Been Listed on the Stock

question 35

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 share price is closest to:

• A)$19.57.
• B)$24.40.
• C)$27.50.
• D)$31.20.

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Definitions:

Elements

Elements refer to the essential components or criteria that must be present for a legal claim or theory to be valid.

White-Collar Crime

Financially motivated, non-violent crime committed by businesses and government professionals.

Mail Fraud

A type of financial fraud that involves using the postal service to carry out schemes designed to defraud others.

Embezzlement

The act of dishonestly withholding or misappropriating funds or property entrusted to one's care, typically in a workplace or official capacity.