Simpson Inc

question 35

Multiple Choice

Simpson Inc.is considering a vertical merger with The Lachey Company.Simpson currently has a required return of 11%,while Lachey's required return is 15%.The market risk premium is 5% and the risk-free rate is 5%.Assume the market is in equilibrium.If Simpson is going to make up 67% of the new firm (and Lachey will comprise the remaining 33%) ,what will be the beta of the new merged firm? There will be no additional infusion of debt in the merger.

• A)1.46
• B)1.54
• C)1.61
• D)1.69
• E)1.78

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Cognitive frameworks or concepts that help organize and interpret information from the world around us.

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The emotional bonds that form between people, starting from early infancy, which influence the individual's emotional and social development throughout life.

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The capacity to recognize and assign thoughts, feelings, intentions, and comprehension both to oneself and to other individuals, while realizing that others possess different beliefs, wishes, and intents from one's own.

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All our thoughts and feelings about ourselves, in answer to the question, “Who am I?”