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For a levered firm where b A = beta of assets and b D = beta of debt, the equity beta ( b E )

For a levered firm where b_A = beta of assets and b_D = beta of debt, the equity beta (b_E) equals

A) b_E = b_A

B) b_E = b_A + (D/E) [b_A - b_D]

C) b_E = b_A + (D/(D + E)) [b_A b_D]

D) None of these options.

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