Which of the following is NOT part of the Classic assumption group (Assumption group 1) with regard to estimating the Cost of Equity?

Group of answer choices

1-The Debt has no risk of default

2-The Risk of the Tax Shield is the same as the Business Risk of the firm

3-The Risk of the Tax Shield is the same as the Risk of the firm's Debt

4-The Dollar level of the firm's Debt is constant

Suppose you believe the Modern Assumption set is more applicable to company you are studying. You estimate a levered Beta of 1.75 for this firm. Further, you estimate the Unlevered Beta for this industry to be 1.00. What is the subject firm's Debt-to-Equity Ratio?

Group of answer choices

1- 1.75

2- .75

3- .57

4- 1.33