Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.25. Ethier is financed with...

Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.25. Ethier is financed with 55% debt and has a levered beta of 1.75. If the risk free rate is 6% and the market risk premium is 6%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places. %

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Additional premium that Ethier's shareholders require to be compensated for financial risk
=(1.75-1.25)*6%
=3%

jeff jeffy answered 1 year ago

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