Adams turns to determining a beta for use in evaluating the offer of an equity stake in
Question:
Adams turns to determining a beta for use in evaluating the offer of an equity stake in a private insurer and rounds her beta estimate of Alleghany, the public comparable, to 0.70. As of the valuation date, Alleghany Corporation has no debt in its capital structure.
The private insurer is 20 percent funded by debt.
If a beta of 0.70 is assumed for the comparable, what is the estimated beta of the private insurer?
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Because Alleghany does not use debt its beta does not ...View the full answer
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