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For a Levered Firm Where B_A = Beta of Assets

Question 17

Multiple Choice

For a levered firm where b_A = beta of assets and b_D = beta of debt, the equity beta (b_E) equals

A) b_E = b_A
B) b_E = b_A + (D/E) × [b_A - b_D]
C) b_E = b_A + (D/(D +E) ) × [b_A − b_D]
D) None of these options.

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