Indicate whether the statements below are true or false. If the answer is true, explain why it is true. If the answer is false, explain why it is false. Feel free to give examples or counter-examples.

a) You computed the equity beta of TIE Inc. (E, TIE) = 0.5. TIE Inc. does not have any debt. Based on their business risk, you identify two firms that are comparable to TIE, namely: SOCK and SHOE. Their Debt/Equity leverage ratios are 0.7 and 0.1, respectively. If D = 0.2 for both, then these two comparable firms have approximately the following equity betas, respectively:

(E, SOCK) = 0.71

(E, SHOE) = 0.4