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A Firm Has a Debt-To-Equity Ratio of 1

question 63

Multiple Choice

A firm has a debt-to-equity ratio of 1.20.If it had no debt, its cost of equity would be 15%.Its cost of debt is 10%.What is its cost of equity if there are no taxes or other imperfections?


Definitions:

Adopted Children

Individuals who have been legally taken and raised by parents who are not their biological parents.

Authoritarian

An authoritarian refers to a governing or leadership style characterized by absolute or blind obedience to authority, as against individual freedom and related to centralized power.

Authoritative

A parenting style characterized by high demands and high responsiveness, where parents set clear standards for their children but also encourage independence and are open to communication.

Permissive

A parenting style characterized by low demands with high responsiveness, where parents are lenient and may only step in when necessary.

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