Question
1A. Your company's interest expense for a loan borrowed to finance a project is $2,000,000. Given that the corporate tax rate is 20 %, what
1A. Your company's interest expense for a loan borrowed to finance a project is $2,000,000. Given that the corporate tax rate is 20 %, what is the after-tax cost of this debt?
$ 2,400,000 | ||
$ 400,000 | ||
$ 1,800,000 | ||
$ 1,600,000 |
1B. Which of the following changes a firm's Beta?
Changes in product line. | ||
Changes in technology. | ||
Changes in the market. | ||
All |
1C. Which of the following is a non-systematic risk?
Inflation risk | ||
Risk of unexpected strike by the employees of a company. | ||
Interest rate risk | ||
All |
1D. If a security's Beta is equal to zero, then its rate of return is equal to the rate of return on the market portfolio.
True
False
1E. Systematic risk can not be eliminated by diversification.
True
False
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