1 assume a modigliani and miller world with no taxes where, Ask an Expert

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1. Assume a Modigliani and Miller world with no taxes where the required rate of return of an un-levered firm is 9.5%. What is the cost of equity in an identical levered firm where the cost of debt is 9% and the D/E ratio is 2.0?

a. 9.25%

b. 10.50%

c. 18.00%

d. 0.50%

2. When considering the risk of a foreign investment, a higher risk might arise from exchange rate risk and political risk while lower risk might result from international diversification. a. True b. False

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92698593

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