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In order for a firm to estimate its cost of debt from observing the price of its debt instruments, the: firm must depend on markets

In order for a firm to estimate its cost of debt from observing the price of its debt instruments, the:
firm must depend on markets being reasonably efficient.
debt must be privately held by the firm.
beta of the debt must be greater than the beta of the firm's equity.
None of these are correct.
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