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SMU has 10,000 shares outstanding and a stock price of $10. The company also has $25,000 of debt outstanding and borrows at the risk-free interest
SMU has 10,000 shares outstanding and a stock price of $10. The company also has $25,000 of debt outstanding and borrows at the risk-free interest rate. The risk-free interest rate is 10%. Assume that capital markets are perfect. If the unlevered beta is 0.72, SMU's levered beta would be close to:
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0.90
0.72
0.80
0.86
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