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

question 39

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)Many practitioners analyze other financial characteristics of a firm,when they forecast betas.
• B)U.S.Treasuries are never subject to interest rate risk unless we select a maturity equal to our investment horizon.
• C)If a firm where to change industries,using its historical beta would be inferior to using the beta of other firms in the new industry.
• D)When using historical returns to forecast future betas,we must be mindful of changes in the environment that might cause the future to differ from the past.

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Definitions:

Culture War

The term culture war refers to the conflict between groups with different cultural values, beliefs, and practices, often highlighting societal divisions on issues like morality, religion, and lifestyle.

Taboo

A social or cultural prohibition on certain behaviors, discussions, or practices, often considered morally unacceptable or offensive.

Moral Holiday

A concept where norms and morals are temporarily relaxed, allowing for behaviors that are typically discouraged or penalized.

Mores

The customs, norms, and behaviors that are considered morally significant or obligatory in a particular society, guiding moral and ethical conduct.