please do 3.8 part a

3.8 The previous exhibit contains estimations of B coefficients, market capitalization, and net debt for a number of paper companies.

a. Adjust their estimated betas for regression toward the mean and estimate the average unlevered B coefficients.

3.8 The previous exhibit contains estimations of B coefficients, market capitalization, and net debt for a number of paper companies. a. Adjust their estimated betas for regression toward the mean (see Section 3.3) and estimate the average unlevered B coefficients. b. Update the data to the present and compute the average unlevered B coefficient. 3.7 The B coefficient of the stock of a company is 1.32. Its average market value net debt rutie is 50%. What is its unlevered B coefficient? Paper Industry Capital Structure and B Coefficients as of December 2002 (Million US$ except as noted) Levered Market Net Beta! Equity2 Debe? Abitibi-Consolidated 1.14 4,374 5.770 Bowater Inc. 0.70 1.928 2,278 Domtar Inc. 4 0.95 3,356 2,655 International Paper Co. 0.87 16,931 11,823 Meadwestvaco Corp. 4,186 4,809 Packaging Corp. of America 0.35 1,874 688 Pope & Talbot, Inc. 0.70 186 226 Temple-Inland Inc 0.93 2.149 1,772 Weyerhauser Co. 1.06 10,070 14,041 Regression of company returns on S&P 500 returns, unadjusted, ?Shares outstanding times share price Book interest bearing debt minus cash and marketable securities. Canadian dollars Sources: Companies' 10-ks and 10-Q and Deutsche Bank Securities. 0.99 Problems 65 38/ The previous exhibit contains estimations of coeffolents, market capitalization, and net debt for a number of paper companies. 4. Adjust their estimated betas for regression toward the mean (sco Section 3.3) and estimate the average unlevered coofficients. b. Update the data to the present and compute the average unlevered B coefficient