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(4 points) Consider a firm that historically has been continuously rebalancing its debt-to-value ratio to 5096. Today, the firm decides to decrease its debt-to-value ratio
(4 points) Consider a firm that historically has been continuously rebalancing its debt-to-value ratio to 5096. Today, the firm decides to decrease its debt-to-value ratio to 30%, and plans to continuously rebalance to this new ratio in the future. Suppose this decrease changes neither the company's debt beta nor its asset beta. As a result of this decrease in leverage, a. The equity beta increases O b. The equity beta falls O c. The equity beta stays unchanged d. The equity beta could go up or down O e. None of the above
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