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Consider a firm that is funded by debt and equity. C/(C + T)% of its assets are cinema assets, and T/(C + T)% of its
Consider a firm that is funded by debt and equity. C/(C + T)% of its assets are cinema assets, and T/(C + T)% of its assets are theatre assets. Cinema assets have a beta of 0.5, and theatre assets have a beta of 2. The firms levered beta is 2, and it has as much equity funding as debt funding. What is the ratio of its cinema assets to its theatre assets, C/T ? [6 marks]
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