Question
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.3. Ethier is financed with 50% debt and has a levered beta of 1.5.
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Ethier Enterprise has an unlevered beta of 1.3. Ethier is financed with 50% debt and has a levered beta of 1.5. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places.
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
