There is a company A, whose assets consists of two parts. The first part has a...
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There is a company A, whose assets consists of two parts. The first part has a value of 15 and consists of shares in company B. The second part has a value of 25 and a beta of 2. Company A's liabilities consists of debt and equity. Company A's debt has a value of 20 and a beta of 1. Company B has a share price of 10 and it has 10 shares outstanding. It also has risk-free debt worth 40 outstanding. The asset beta for company B is 1. a. What is the equity beta of company B? b. What is the asset beta of company A? c. What is the equity beta of company A? There is a company A, whose assets consists of two parts. The first part has a value of 15 and consists of shares in company B. The second part has a value of 25 and a beta of 2. Company A's liabilities consists of debt and equity. Company A's debt has a value of 20 and a beta of 1. Company B has a share price of 10 and it has 10 shares outstanding. It also has risk-free debt worth 40 outstanding. The asset beta for company B is 1. a. What is the equity beta of company B? b. What is the asset beta of company A? c. What is the equity beta of company A?
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Lets address each question one by one a To find the equity beta of company B we can use the market v... View the full answer
Related Book For
Numerical Methods With Chemical Engineering Applications
ISBN: 9781107135116
1st Edition
Authors: Kevin D. Dorfman, Prodromos Daoutidis
Posted Date:
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