A Very Large Firm Has a Debt Beta of Zero

question 45

Multiple Choice

A very large firm has a debt beta of zero. If the cost of equity is 11%, and the risk-free rate is 5%, the cost of debt is:

• A) 5%.
• B) 6%.
• C) 11%.
• D) 15%.

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Definitions:

Nuclear Pores

Porelike openings in the nuclear envelope where the inner and outer membranes fuse.

Chromatin

A complex of DNA and proteins found in the nucleus of cells, which condenses to form chromosomes during cell division.

Nucleolus

A structure within the nucleus of a cell where ribosomal RNA is produced.

Microtubules

Cylindrical structures within the cell that are part of the cytoskeleton, helping in cell shape, division, and intra-cellular transport.