Question
How is the value of equity determined for a market value balance sheet? Summation of the market value of the firm's outstanding equity and debt
How is the value of equity determined for a market value balance sheet?
Summation of the market value of the firm's outstanding equity and debt securities
Summation of all the sale prices for shares of stock sold to shareholders
Summation of all shareholder investments in the firm plus the value of any retained earnings
Number of shares outstanding multiplied by the current price per share
Number of shares outstanding multiplied by the current price per share minus the amount of debt outstanding
Assume the overall market has a risk premium of 8.3 percent and the risk-free rate is 3.6 percent. What is the risk premium for a stock that has a .87 beta and a standard deviation of 11.2 percent?
3.62%
10.82%
7.60%
7.22%
4.58%
The use of debt is called:
a- business risk.
b- operating leverage.
c- production leverage.
d- total asset turnover risk.
f- financial leverage.
The asset beta is defined as the beta of:
the common stock of an unlevered firm.
a risk-free security.
an undiversified portfolio.
the common stock of a levered firm.
a fully diversified portfolio.
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