Use the Following Information to Answer the Question(s)below

question 94

Multiple Choice

Use the following information to answer the question(s) below.
Luther Industries has 25 million shares outstanding trading at $18 per share.In addition,Luther has $150 million in outstanding debt.Suppose Luther's equity cost of capital is 13%,its debt cost of capital is 7%,and the corporate tax rate is 40%.
-Which of the following statements is FALSE?

• A)There may be reasons to exclude certain historical data as anomalous when estimating beta.
• B)Many practitioners use adjusted betas,which are calculated by averaging the estimated beta with 1.0.
• C)The beta estimated from linear regression can be very sensitive to outliers,which are returns of unusually small magnitude.
• D)If we use very old data to when estimating beta,they data may be unrepresentative of the current market risk of the security.

---

Definitions:

Cannabis

A drug derived from the Cannabis plant, used for recreational or medicinal purposes, known for its psychoactive properties.

Euphoria

A feeling or state of intense excitement and happiness.

Sociability

The tendency or ability to associate with others in a friendly or social manner.

Marijuana

A mind-altering substance derived from the Cannabis plant, utilized either for therapeutic or leisure activities.