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25. The assets of company X have a beta equal to 1. Assume that the company's debt has a beta
equal to 0.5 and that X's equity has a beta equal to 2. Consider an investor who holds 10% of the
company's debt and 10% of the company's equity. The beta of the investor's portfolio is equal to
0.25
1
1.25
0.1
0.25
1
1.25
0.1

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25 The assets of company X have a beta equal to 1 Assume t.pdf

  • 1. 25. The assets of company X have a beta equal to 1. Assume that the company's debt has a beta equal to 0.5 and that X's equity has a beta equal to 2. Consider an investor who holds 10% of the company's debt and 10% of the company's equity. The beta of the investor's portfolio is equal to 0.25 1 1.25 0.1 0.25 1 1.25 0.1