Unlevered beta-premium for financial risk

Assignment Help Financial Management

Reference no: EM13883450

Premium for Financial Risk

Ethier Enterprise has an unlevered beta of 1.25. Ethier is financed with 45% debt and has a levered beta of 1.55. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places.

Reference no: EM13883450

Questions Cloud

Maintain this dividend-what is the current share price : Apocalyptica Corp. pays a constant $8.60 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 11 percent, what is the current share ..

Does openness promote growth : Obtain the OLS estimates, the standard errors, and complete the ANOVA table - obtain a 95 percent confidence interval for the slope coefficient.

What is the price of treasury bill : What is the price of a U.S. Treasury bill with 68 days to maturity quoted at a discount yield of 1.30 percent? Assume a $1 million face value.

What is the bank discount yield and bond equivalent yield : A Treasury bill with 85 days to maturity is quoted at 97.630. What is the bank discount yield, the bond equivalent yield, and the effective annual return?

Unlevered beta-premium for financial risk : Ethier Enterprise has an unlevered beta of 1.25. Ethier is financed with 45% debt and has a levered beta of 1.55. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's shareholders require to ..

Unlevered beta : Counts accounting has a beta of 1.50. The tax rate is 40%, and Counts is financed with 30% debt. What is Counts' unlevered beta?

Estimate the heat transfer rate across the slab : The opposite surface of a slab A and B are maintained at 100 degree and 70 degree respectively ,if the steel plate measures 10cm thick estimate the heat transfer rate across the slab and the temperature recorded by a ther mocouple embedded 3cm fro..

What is meant by the cost of capital : What is meant by the "cost of capital", as the term pertains to common shareholders' equity? We can easily determine the cost of debt, which is the stated rate multiplied by one minus the marginal tax rate; and the cost of preferred stock is usually ..

What interest rate is the bank charging : You’ve just purchased your first home for $360,000! Your 30 year mortgage is $300,000. Your annual mortgage payments are $24,000. What interest rate is the bank charging you? If instead you had the choice of making monthly payments of $2,000 for 30 y..

User Account

All Pages