A Very Large Firm Has a Debt Beta of Zero

question 23

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%.
• E) It is impossible to tell without the expected market return.

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Definitions:

Endangered Resources

Resources that are in imminent danger of depletion or destruction, necessitating protection or conservation efforts.

Ambient Environment

Sensory surroundings, including temperature, odor, and sound

Sensory Environment

The surrounding environment in terms of how it is perceived through the senses.

Vibes

Informal for the emotional signals a person or the atmosphere of a place sends out to others.