Question
Problem 15-3 Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 40% debt and has a levered beta
Problem 15-3 Premium for Financial Risk
Ethier Enterprise has an unlevered beta of 1.2. Ethier is financed with 40% debt and has a levered beta of 1.7. If the risk free rate is 4% 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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Handbook Of The Economics Of Finance Volume 2A
Authors: George M. Constantinides, Milton Harris, Rene M. Stulz
1st Edition
