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Question
Bailey and Sons has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 40%. What would Bailey's beta be if it used no debt, i.e., what is its unlevered beta?a. 0.64
b. 0.67
c. 0.71
d. 0.75
e. 0.79
Answer
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