Question
1. Negative beta for a company suggests the company will return less than the risk-free rate during a down market and return more than the
1. Negative beta for a company suggests the company will return less than the risk-free rate during a down market and return more than the risk-free rate during an up market. True or False
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2.Use Hamada's equation to find the unlevered beta (U) given the following:
Levered beta (E) = 0.92
Weight of debt (D) = 37.00%
Tax rate (t) = 25.00%
(Enter your answer as a number with four decimal places, like this: 9.1234)
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3.Macroeconomic factor models consider economic variables which affect the expected future cash flows of companies to determine the appropriate discount rate. True or false
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