14-7 You are a business analyst with a big investment bank, and you are evaluating the equity risk, business risk, and financial risk of Abilon's Inc. You went online and found that the industry consensus on Abilon's equity risk is 1.5. You also know that the company's debt-equity ratio is 1. What is Abilon's estimated business and financial risk based on the model βA(1 + D/E)? Select one: a. 0.5; 1 b. 0.5; 2 c. 0.75 and 0.5 d. 0.75 and 0.75 e. 1 and 1
14-7 You are a business analyst with a big investment bank, and you are evaluating the equity risk, business risk, and financial risk of Abilon's Inc. You went online and found that the industry consensus on Abilon's equity risk is 1.5. You also know that the company's debt-equity ratio is 1. What is Abilon's estimated business and financial risk based on the model βA(1 + D/E)? Select one: a. 0.5; 1 b. 0.5; 2 c. 0.75 and 0.5 d. 0.75 and 0.75 e. 1 and 1
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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14-7
You are a business analyst with a big investment bank, and you are evaluating the equity risk, business risk, and financial risk of Abilon's Inc. You went online and found that the industry consensus on Abilon's equity risk is 1.5. You also know that the company's debt-equity ratio is 1. What is Abilon's estimated business and financial risk based on the model βA(1 + D/E)?
Select one:
a. 0.5; 1
b. 0.5; 2
c. 0.75 and 0.5
d. 0.75 and 0.75
e. 1 and 1
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