1. Ang Enterprises has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 40%.What would Ang's beta be if it used no debt, i.e., what is its unlevered beta?
Please show all calculations, step by step.
2. Zero coupon bonds: Ten-year zero coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interested is compounded semiannually. If similar bonds in the market yield 10.5 percent, what is the value for these bonds?