What is the unlevered beta for ang enterprises

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Problem 1: Ang Enterprises 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 Ang's beta be if it used no debt, i.e., what is its unlevered beta?

Option 1: 0.71

Option 2: 0.75

Option 3: 0.79

Option 4: 0.64

Option 5: 0.67

Problem 2: Which of the following is CORRECT about the optimal capital structure?

Option 1: The capital structure that minimizes the required return on equity also maximizes the stock price.

Option 2: The capital structure that minimizes the WACC also maximizes the price per share of common stock.

Option 3: The capital structure that minimizes the interest rate on debt also maximizes the expected EPS.

Option 4: The capital structure that maximizes expected EPS also maximizes the price per share of common stock.

Option 5: The capital structure that gives the firm the best credit rating also maximizes the stock price.

Reference no: EM132933994

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