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Generally, you would expect the beta of debt for a firm to be a. Negative b....

Generally, you would expect the beta of debt for a firm to be

a. Negative

b. The same as the equity beta

c. A percentage of the equity beta based on the firm’s capital structure

d. Near zero

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Answer #1

Ans d. Near zero

Generally, you would expect the beta of debt for a firm to be Near zero. Beta represents systematic risk. This is the risk present in the system and cannot be diversified. When debt beta is zero it means that the debt is risk free. Normally the debt are issued in the form of bonds which are risk free.

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