Compensated for financial risk


Ethler Enterprise has an unlevered beta of 1.1. Ether is financed with 35% debt and has levered beta of 1.2. If the risk free rate is 5.5% and the market risk prremium is 5%, how much is the additional premium that Ether's shareholders require to be compensated for financial risk?

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Finance Basics: Compensated for financial risk
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