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QUESTION
If Kat Corp were an all-equity firm, it would have a beta of 0. However, we know that Kat has debt-to-equity ratio of 0. The market risk premium is...
If Kat Corp were an all-equity firm, it would have a beta of 0.8. However, we know that Kat has debt-to-equity ratio of 0.50. The market risk premium is 5% and Treasury bonds yield 3%. Assume zero debt beta.
