Consider the Following Equation: β_U = β_E

question 42

Multiple Choice

Consider the following equation: β_U = β_E + β_D
The term β_U in the equation is?

• A) the same as the beta of the firm's assets.
• B) the required return on the firm's equity.
• C) the proportion of the firm financed with equity.
• D) equal to zero if the firm's debt is riskless.

---

Definitions:

Speech

The expression of thoughts and feelings by articulate sounds.

Condense

To reduce something, such as a text or statement, to a shorter form while retaining most of the essential content.

Data

Facts and statistics collected together for reference or analysis.

Paraphrase

To express the meaning of something using different words, especially to achieve greater clarity.