An Analyst Gathers the Following Information for Firm a and Firm

question 11

Multiple Choice

An analyst gathers the following information for Firm A and Firm B.Use the information to compute the industry unlevered beta and the appropriate beta for Firm B to use in the WACC. Firm A: CAPM beta = 1.6;debt-to-equity ratio = 1.2
Firm B: CAPM beta = 1.0;debt-to-equity ratio = 0.8
The appropriate beta for Firm B is closest to:

• A)1.026
• B)1.154
• C)1.170
• D)1.163

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Definitions:

Acceptance

The agreement to the terms of an offer, contract, or proposal, thereby creating a binding contract.

Intention

The state of mind or determination to perform a specific act or to act in a specific manner for a specific purpose.

Brown Bear

A large species of bear found in various parts of the world, known for its broad shoulders, humped back, and brown fur.

Fired Gun

refers to discharging a firearm, typically indicating the action of shooting.