Business and Financial Risk Assume a firm's debt is risk-free, so that the cost of debt equals the risk-free rate, $R_f$. Define $\beta_A$ as the firm's asset beta-that is, the systematic risk of the firm's assets. Define $\beta_S$ to be the beta of the firm's equity. Use the capital asset pricing model, CAPM, along with MM Proposition II to show that $\beta_S=\beta_A \times(1+B / S)$, where $B / S$ is the debt-equity ratio. Assume the tax rate is zero.