If the Debt Beta Is Zero, Then the Relationship Between

question 18

Multiple Choice

If the debt beta is zero, then the relationship between the equity beta and the asset beta is given by

• A)equity beta = 1 + [(beta of assets)/(debt-equity ratio)].
• B)equity beta = (1 − debt-equity ratio)(beta of assets).
• C)equity beta = (1 + debt-equity ratio)(beta of assets).
• D)equity beta = 1 + (debt-equity ratio/ beta of assets).

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