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Nero Violins has the following capital structure: Total Market Value Beta ($ millions) Security Debt...

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Nero Violins has the following capital structure: Total Market Value Beta ($ millions) Security Debt Preferred stock Common stock 0 120 40 1.40 60 319 a, What is the fermn's asset beta? (Hint What is tho beta of a portolof ll h ftim't securites?) (0o not round intermediate calcu places.) Asset beta b. Assume that the CAPM is correct What discount rate shouls Nero set for nvestments that expand the scale of its operations without changing its asset beta? Assume a risk-free interest rate of 5% and a market risk premium of 6%. (Do not round intermediate calculations. E nter your answer as a percent rounded to 2 decimal Paes Discount rate

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