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The levered beta of Aegean Sea is: Select one: O a.1.07 O b. 2.05 O O O c. 1.00 d. 0.98 e. 1.59

The levered beta of Aegean Sea is: Select one: O a.1.07 O b. 2.05 O O O c. 1.00 d. 0.98 e. 1.59

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aegean Sea Inc. is a company based in Greece, with substantial interests in the hotel/tourism and transportation sectors. The table below gives a breakdown of the firm's operating income by sector and the respective unlevered betas of comparable firms Sector Hotel/Tourism Transportation Operating Income 60% 40% Unlevered beta of comparable firms 1.25 0.80 Aegean Sea Inc. has a debt to equity ratio of 70%. Greece has a rating of B-, the default spread for B-rated bonds is 3%, and the Greek equity index return is three times higher than the Greek long-term bond. The US treasury bond rate is 2%. The tax rate for the firm is 30%. Based on the above information answer the following questions:
Transcribed Image Text:Aegean Sea Inc. is a company based in Greece, with substantial interests in the hotel/tourism and transportation sectors. The table below gives a breakdown of the firm's operating income by sector and the respective unlevered betas of comparable firms Sector Hotel/Tourism Transportation Operating Income 60% 40% Unlevered beta of comparable firms 1.25 0.80 Aegean Sea Inc. has a debt to equity ratio of 70%. Greece has a rating of B-, the default spread for B-rated bonds is 3%, and the Greek equity index return is three times higher than the Greek long-term bond. The US treasury bond rate is 2%. The tax rate for the firm is 30%. Based on the above information answer the following questions:
The levered beta of Aegean Sea is: Select one: O a. 1.07 O b. 2.05 O O c. 1.00 d. 0.98 e. 1.59
Transcribed Image Text:The levered beta of Aegean Sea is: Select one: O a. 1.07 O b. 2.05 O O c. 1.00 d. 0.98 e. 1.59
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