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Which of the Following Equations Would NOT Be Appropriate to Use

Question 1

Multiple Choice

Which of the following equations would NOT be appropriate to use in a firm with risky debt?


A) βE = βU + Which of the following equations would NOT be appropriate to use in a firm with risky debt? A) β<sub>E</sub> = β<sub>U</sub> + (β<sub>U</sub> - β<sub>D</sub>) B) β<sub>U</sub> = β<sub>E</sub>+ (β<sub>U</sub> - β<sub>D</sub>) C) β<sub>E</sub> = β<sub>U</sub> + β<sub>U</sub> D) β<sub>U</sub> = β<sub>E</sub> + β<sub>D</sub> (βU - βD)
B) βU = βE+ Which of the following equations would NOT be appropriate to use in a firm with risky debt? A) β<sub>E</sub> = β<sub>U</sub> + (β<sub>U</sub> - β<sub>D</sub>) B) β<sub>U</sub> = β<sub>E</sub>+ (β<sub>U</sub> - β<sub>D</sub>) C) β<sub>E</sub> = β<sub>U</sub> + β<sub>U</sub> D) β<sub>U</sub> = β<sub>E</sub> + β<sub>D</sub> (βU - βD)
C) βE = βU + Which of the following equations would NOT be appropriate to use in a firm with risky debt? A) β<sub>E</sub> = β<sub>U</sub> + (β<sub>U</sub> - β<sub>D</sub>) B) β<sub>U</sub> = β<sub>E</sub>+ (β<sub>U</sub> - β<sub>D</sub>) C) β<sub>E</sub> = β<sub>U</sub> + β<sub>U</sub> D) β<sub>U</sub> = β<sub>E</sub> + β<sub>D</sub> βU
D) βU = Which of the following equations would NOT be appropriate to use in a firm with risky debt? A) β<sub>E</sub> = β<sub>U</sub> + (β<sub>U</sub> - β<sub>D</sub>) B) β<sub>U</sub> = β<sub>E</sub>+ (β<sub>U</sub> - β<sub>D</sub>) C) β<sub>E</sub> = β<sub>U</sub> + β<sub>U</sub> D) β<sub>U</sub> = β<sub>E</sub> + β<sub>D</sub> βE +
Which of the following equations would NOT be appropriate to use in a firm with risky debt? A) β<sub>E</sub> = β<sub>U</sub> + (β<sub>U</sub> - β<sub>D</sub>) B) β<sub>U</sub> = β<sub>E</sub>+ (β<sub>U</sub> - β<sub>D</sub>) C) β<sub>E</sub> = β<sub>U</sub> + β<sub>U</sub> D) β<sub>U</sub> = β<sub>E</sub> + β<sub>D</sub> βD

Correct Answer:

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