Solved

The Equity Beta of a Firm That Is Financed with 40

Question 60

Multiple Choice

The equity beta of a firm that is financed with 40% debt and 60% equity is 1.6. The beta of the debt is 0.1. The expected return on the market is 10%, and the risk-free rate is 5%. What rate
Of return should this firm require on its projects?


A) 5.5%
B) 13.0%
C) 10.0%
D) 15.0%

Correct Answer:

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