A Very Large fiRm Has a Debt Beta of Zero

question 2

Multiple Choice

A very large firm has a debt beta of zero.If the cost of equity is 11%, and the risk-free rate is 5%, the cost of debt is:

• A)5%
• B)6%
• C)11%
• D)15%
• E)It is impossible to tell without the expected market return.

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Definitions:

Species

In biological classification, it refers to the basic unit of classification, defined as groups of organisms capable of interbreeding and producing fertile offspring.

College Course

A unit of teaching that typically covers a specific subject area in a higher education institution, often forming part of a larger program of study.

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The natural science that studies matter, energy, and the fundamental forces, explaining the behavior of the universe.

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The effect that the attitudes, values, and behaviors of peers have on an individual's own attitudes and behaviors.