Decide to estimate the beta of both? firms debt as zero

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Reference no: EM131904325

Harrison? Holdings, Inc.? (HHI) is publicly? traded, with a current share price of $ 30 per share. HHI has 20 million shares? outstanding, as well as $ 70 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 $ 857 million, and an enterprise value of $ 1.04 billion. After a little? research, you find that the average asset beta of other fast food restaurant chains is 0.77.

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, you do a regression analysis on? HHI's historical stock returns in comparison to the? S&P 500, and estimate an equity beta of 1.31.

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

?a) HHI's asset beta is 1.17 (Round to two decimal? places.)

The hotdog equity beta is ________. ?(Round to two decimal? places.)

Reference no: EM131904325

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