The Asset Beta of a Levered Firm Is Generally

question 49

Multiple Choice

The asset beta of a levered firm is generally:

• A)equal to the equity beta.
• B)different from the equity beta.
• C)different from the debt beta.
• D)the simple average of the equity beta and debt beta.
• E)Both B and C.

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Definitions:

Cognitive Dissonance Theory

The idea that people have such distaste for perceiving inconsistencies in their beliefs, attitudes, and behavior that they will bias their own attitudes and beliefs to try to deny inconsistencies.

Attributional Ambiguity

A phenomenon whereby members of stigmatized groups often can be uncertain whether negative experiences are based on their own actions and abilities or are the result of prejudice.

Discrimination

Unequal treatment or prejudice against individuals on the basis of their membership in a particular group, negatively affecting their opportunities and well-being.

Cognitive Dissonance Theory

A theory suggesting that people experience discomfort (dissonance) when holding conflicting cognitions and are motivated to reduce this discomfort by altering attitudes, beliefs, or behaviors.