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For a Levered Firm, Return on Equity (RE) Is Equal

Question 36

Multiple Choice

For a levered firm, return on equity (rE) is equal to:

A) rE = rA
B) rE = rA + (D/E) * [rA - rB]
C) rE = rA + (D/(D + E) ) * [rA - rB]
D) None of the above

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