A Firm Has a Debt-To-Equity Ratio of 1

question 12

Multiple Choice

A firm has a debt-to-equity ratio of 1.20. If it had no debt,its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections?

• A) 10%
• B) 15%
• C) 18%
• D) 21%
• E) None of these.

---

Definitions:

Joint Surface

The part of a bone that articulates with another bone, usually covered with cartilage to enable smooth movements.

Synovial Joint

A type of joint that is surrounded by a fluid-filled capsule, allowing for smooth movement between bones.

Most Movable

Refers to joints with the greatest range of motion, such as the ball-and-socket joints of the shoulder and hip.

Suture

A type of joint between the bones of the skull where the bones are tightly bound by fibrous tissue, appearing primarily in the human skull.