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Bailey and Sons has a levered beta of 1.60, its capital structure consists of 40% debt and 60% equity, and its tax rate is 25%.

Bailey and Sons has a levered beta of 1.60, its capital structure consists of 40% debt and 60% equity, and its tax rate is 25%. What would Bailey's beta be if it used no debt, i.e., what is its unlevered beta?

Group of answer choices

0.93

1.07

1.35

1.18

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