the following firms are likely to have high asset betas:
1) firms with ninche appeal.
2) firms that sell luxury goods.
Two firms have the same asset beta but different equity betas. The direct cause is likely: a. The importance of variable costs varies across these firms b. The firms have different proportions of debt relative to equity b. One firm’s sales are more cyclical than the other c. All of the above d. None of the above
firms in the following sectors tend to have high betas:
Which of the following is true of asset betas? a. Asset betas are expected to vary greatly within firms in the same industry. b. Businesses that are less sensitive to market and economic conditions tend to have higher asset betas than more cyclical industries. c. Businesses that are less sensitive to market and economic conditions tend to have lower asset betas than more cyclical industries. d. A and B are correct.
firms with the highest equity betas have:
true or false: firms with high market to book ratios are likely to have higher earnings going forward.
Briefly describe the factors that determine asset betas.
Companies with high ratios of fixed costs to total project value tend to have higher betas. True False
Relatively high cost of capital is more likely to occur in which of the following: Select one: a. Highly liquid domestic capital markets b. None of the mentioned choices c. Highly illiquid domestic capital markets In principle, Multinational firms would have a higher ________ than domestic firms because their cash flows would be more diversified internationally. Select one: a. equity ratios b. none of the choices c. debt ratios
Two firms are identical except for their capital structure. Company A is funded by 30% debt and 70% equity. Company B is funded by 40% debt and 60% equity. (a) What are the relationships between their asset betas and equity betas? Fill in the blank. Company A (“>”, “=”, or “<”) Company B A’s Asset beta B’s Asset beta A’s Equity beta B’s Equity beta (b) Briefly explain your rationale for the answers provided in part (a) above.
Companies will generally have a ____ beta if their: Multiple Choice high; sales are high compared to other firms in their industry. low; stock price is relatively low. high; sales are growing at a steady rate of increase. high; sales are highly dependent on the market cycle. low; production costs are primarily fixed in nature.