Question: Question 6 You have computed a bottom - up beta for a firm. You then learn that the firm is planning a large bond issuance

Question

6

You have computed a bottom

-

up beta for a firm. You then learn that the firm is planning a large bond issuance and you have to revise your estimate. Assuming that the market value of equity remains unchanged upon the public announcement of this financing decision, what will be the effect on the bottom up beta?

Bottom

-

up beta will increase.

Bottom

-

up beta will decrease.

Question 6 You have computed a bottom-up beta for a firm.

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