Comparing Two Otherwise Equal Firms, the Beta of the Common

question 36

Multiple Choice

Comparing two otherwise equal firms, the beta of the common stock of a levered firm is ____________ than the beta of the common stock of an unlevered firm.

• A)equal to
• B)significantly less
• C)slightly less
• D)greater
• E)None of the above.

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Definitions:

31st Payment

The payment made as the thirty-first installment in a series of payments or financial obligations.

Amortized

The process of spreading out a loan into a series of fixed payments over time, which covers both the principal and the interest.

Compounded Monthly

Interest calculation strategy where interest is added to the principal sum every month, allowing the investment to grow at a faster pace.

Amortized

The process of gradually paying off debt through a series of fixed payments that include both interest and a portion of the principal.