Question: Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as $64 million in debt. The founder of HHI, Harry Harrison, made his fortune in the fast food business. He sold off part of his fast-food empire and purchased a professional hockey team. HHI's only assets are the hockey team, together with 50% of the outstanding shares of Harry's Hotdogs restaurant chain. Harry's Hotdogs (HDG) has a market capitalization of $850 million, and an enterprise value of $1.05 billion. After a little research, you find that the average asset beta of other fast-food restaurant chains is 0.75. You also find that the debt of HHI and HDG is highly rated, and so you decide to estimate the beta of both firms' debt as zero. Finally, do a regression analysis on HHI's historical stock returns in comparison to the S&P 500 and estimate an equity beta of 1.33.

a) Given this information, estimate the beta of HHI's investment in the hockey team.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as $64 million in debt. The founder of HHI, Harry...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $$30$ per share. HHI has 23 million shares outstanding, as well as $$70$ million in debt. The founder of HHI, Harry...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as $64 million in debt. The founder of HHI, Harry...

Please find the asset beta, debt beta, and beta of the investment. Need to find all three. Round to four decimal points. Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $40 per share. HHI has 22 million shares outstanding, as well as $67 million in debt. The founder of HHI, Harry...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $35 per share. HHI has 24 million shares outstanding, as well as $60 million in debt. The founder of HHI, Harry...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $31 per share. HH has 26 million shares outstanding, as well as $61 million in debt. The founder of HHI, Harry...

Assignment FIN 215 Introduction to Finance Total Marks 25 Instructions: a. The assignment need to be MS Word format Ques. 1 Using the data in the following table, estimate the average return and...

please show steps Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as $64 million in debt. The founder of...

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $32 per share. HHI has 20 million shares outstanding, as well as $64 million in debt. The founder of HHI, Harry...

Replace the forces shown on the rectangular plate by a single equivalent force. Where should this equivalent force act on the plate and why? 300 mm A D 200 mm 6 N 4N 5 N

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following data concerning its operations: Variable Actual Component Component Total for February...

Year - to - date, Oracle had earned a 1 2 . 5 7 percent return. During the same period, Valdero Energy earned - 9 . 3 2 percent

A hula hoop and solid disc of equal radii are rolled, from rest and without slipping, down an incline plane. Which one will reach the bottom of the inclined plane first? Explain.

What are the typical variables used in indexing and ranking? lo1

What types of variables should the researcher consider when screening for each of the following: export markets, foreign direct investment, and global sourcing? lo1

What are the major issues to consider when selecting foreign business partners? lo1