An All-Equity Firm Has a Beta of 0

question 27

Multiple Choice

An all-equity firm has a beta of 0.94.Assume the beta of debt is equal to the risk-free beta.If the firm changes to a debt-equity ratio of 0.35,its equity beta would be ________,and if it changes its debt-equity ratio to 0.40,its equity beta would be ________.

• A)1.269; 1.316
• B)1.269; 1.234
• C)1.190; 1.234
• D)1.190; 1.316
• E)1.234; 1.316

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Definitions:

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Capable of being quantified or expressed in numerical terms, allowing for assessment or comparison.

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