Question
SMU Corp recently became public. Since SMU has only been a public company for a short while, you do not have an accurate assessment
SMU Corp recently became public. Since SMU has only been a public company for a short while, you do not have an accurate assessment of SMU's equity beta (Be). Mustang Corp is an otherwise identical company to SMU with the following values for equity beta, debt beta, and D/E ratio. Mustang's equity beta, debt beta, and D/E Equity Beta Debt Beta Debt-Equity Ratio 1.7 0.7 1.1 Find SMU's equity beta if its debt-equity ratio is 0.8, which is expected to remain stable, and SMU's debt is risk free.
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
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