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    Corporate Finance Study Set 1
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    Exam 18: Valuation and Capital Budgeting for the Levered Firm
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    A Very Large Firm Has a Debt Beta of Zero
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A Very Large Firm Has a Debt Beta of Zero

Question 17

Question 17

Multiple Choice

A very large firm has a debt beta of zero. If the cost of equity is 10%,and the risk-free rate is 3%,the cost of debt is:


A) 3%.
B) 6%.
C) 11%.
D) 15%.
E) It is impossible to tell without the expected market return.

Correct Answer:

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