Calculate the asset betas of a and b

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-Company A and Company B want to merge. A has an equity beta of 1.34 and 43% of its capital structure is equity. B has an equity beta of 1.95 and 36% equity in its structure.

-Calculate the asset betas of A and B.Ba of A: .5762 Ba of B: .703

-If they merge, what would the asset beta of the combined company be if A has total assets of $2 billion and B has $500 million? (portfolio beta = weighted average of constituents)

-If the resulting company funded itself with $1 billion in debt and $1.5 billion equity, what would the new equity beta be?

Reference no: EM133061334

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