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The answer is C. Why? 13. Firm XYZ has an equity beta of 2.58, what is the beta of its underlying operations? XYZ has a

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The answer is C. Why?

13. Firm XYZ has an equity beta of 2.58, what is the beta of its underlying operations? XYZ has a debt to value ratio of 64% and its debt is rated B with a beta of 0.30. The marginal tax rate is 35% and the risk-free rate is 4%. A) 1.05 B) 0.98 C) 1.12 D) 1.10

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