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The Asset Beta of a Levered Firm Is 1

Question 35

Multiple Choice

The asset beta of a levered firm is 1.1. The beta of debt is 0.3. If the debt equity ratio is 0.5, what is the equity beta? (Assume no taxes.)

A) 1.50
B) 1.10
C) 0.30
D) 0.15

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