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Author Question: If a firm has an unlevered beta equal to 1.0 a debt-equity ratio of .50 and a tax rate of .30, ... (Read 93 times)

Jramos095

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on: Jul 11, 2018
If a firm has an unlevered beta equal to 1.0 a debt-equity ratio of .50 and a tax rate of .30, calculate the value of the firm's levered beta.
 
  A) 0.65
  B) 1.00
  C) 1.35
  D) 1.73

Question 2

In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the
 
  A) principal.
  B) obligee.
  C) fidelity.
  D) surety.


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katkat_flores

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Reply #1 on: Jul 11, 2018
Answer to Question 1

C
Explanation: C) L = (1+(D/E)(1-t)) U
= (1+(.50)(1-.30)1 = 1.35.

Answer to Question 2

A) principal.
B) obligee.
C) fidelity.
D) surety.
Answer: B


Jramos095

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Reply 2 on: Jul 11, 2018
Gracias!

peter

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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