1. A firm has a tax rate of 35%, an unlevered rate of return of 12%, total debt of $2,000, and an EBIT of $290.00. What is the unlevered value of the firm?
a. 1,346
b. $393
c. $27
d. $2,143
e. $1,571
2. A security that has a rate of return that exceeds the Treasury bill rate but is less than the market rate of return must:
a. be a risk-free asset with a beta less than .99.
b. be a risk-free asset.
c. be a risky asset with a beta less than 1.0.
d. be a risky asset with a standard deviation less than 1.0.
e. have a beta that is greater than 1.0 but less than 2.0.