An all-equity firm has a beta of .85.Assume the beta of debt is equal to the risk-free beta.If the firm changes its capital structure to 40 percent debt its equity beta would be ____ and if it changed to 50 percent debt is equity beta would be _____.
A) 1.190;1.275
B) 1.417;1.275
C) 1.190;1.700
D) 1.417;1.700
E) .567;.850
Correct Answer:
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