The Free-Float Company, a Company in the 36% Tax Bracket

question 53

Multiple Choice

The Free-Float Company, a company in the 36% tax bracket, has riskless debt in its capital structure which makes up 40% of the total capital structure, and equity is the other 60%.The beta of the
Assets for this business is 0.8 and the equity beta is:

• A)0.53
• B)0.73
• C)0.80
• D)1.14
• E)1.47

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Definitions:

Black and White

Thinking characterized by absolute terms, seeing everything as one extreme or the other with no middle ground.

Common Emotion

A basic emotional experience shared among humans, such as happiness, sadness, anger, fear, surprise, and disgust.

Sexual Frustration

The condition of having unfulfilled sexual desires or needs, which may lead to psychological stress or tension.

Apprehension

A feeling of anxiety or fear that something bad or unpleasant will happen.