Estimate firm equity beta

Assignment Help Business Economics
Reference no: EM132410938

We run a delivery service, and we believe our firm has market risk equally between that of UPS and FedEx. We know the following about these 2 firms:

Stock Price per share# shares outstandingMarket Value of DebtUPS$650.7 billion$ 5 billionFedEx$55250 million$ 3 billion

We also have the following data on the securities of these firms:

Beta EBeta DUPS0.80FedEx1.10.1

Assume that our firm has risk-free debt with market value $20 million and equity with market value $450 million. Assume that taxes are not relevant. Please estimate our firm's equity beta.

Reference no: EM132410938

Questions Cloud

How much can nelson short-term debt : How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.5? Round your answer to the nearest cent.
Is naira under-valued or over-valued against the cedi : The actual spot exchange rates for the Nigerian naira (N) and the Kenyan shilling (K$) are respectively N80/GHS and K$25/GHS.
Spot and forward bid-ask rates for the south african : Suppose the spot and forward bid-ask rates for the South African rand/Ghana cedi (ZAR/GHS) exchange rate at a particular today are as follows:
Calculate the forward duration of the ctd : Find the actual March 2020 Treasury Bond price and the appropriate conversion factor to calculate the forward duration of the CTD and the exact futures position
Estimate firm equity beta : Assume that taxes are not relevant. Please estimate our firm's equity beta.
Based on the amount of interest to be paid : a) Based on the amount of interest to be paid, which bank loan should the floral Boutique choose?
Company propose for the funds raised by the ipo : What does this company do? What purpose does the company propose for the funds raised by the IPO?
The misconceptions of sign language : The misconceptions of sign language. Some people believe sign language is based on English. When did it become considered a language?
Demonstrate the principles of love languages : To demonstrate the principles of love languages and effective use of interpersonal communication skills through "gifting" a close interpersonal relationship.

Reviews

Write a Review

Business Economics Questions & Answers

  What is the profit-maximizing price

A. What is the profit-maximizing price? B. What is the Quantity produced in each Country? C. What are RussCo's total profits if the firm is effectively able to produce in both Countries?

  During spring break-students have elasticity of demand

During spring break, students have an elasticity of demand for a trip to Florida of -3. How much should an airline charge students for a ticket if the price it charges the general public is $300?

  Market equilibrium price for a visit to the doctor

Assume market equilibrium price for a visit to the doctor is currently $75. The federal government decides that something fishy is going on and mandates a price ceiling of $81. This means no doctor may charge more than $81 for a visit. What wil..

  Depends only on income and leisure

His utility depends only on income and leisure. How many hours per week does he perform standup comedy?

  True mean wing span of honeybees

What formula should be used to calculate the 90% confidence interval for the true mean wing span of honeybees.

  Purely competitive wheat farmer can sell any wheat

A purely competitive wheat farmer can sell any wheat he grows for $30 every bushel. His five acres of land

  Monopolist faces a demand function

A monopolist faces a demand function x = (1/2)(11-p) where p is the price of the product and x is the quantity demanded. The monopolist has a cost function 3+2x. The government impose a tax of t per unit of output. Assuming that the monopolist maximi..

  About the surplus cash flow

Suppose the CFO of an American corporation with surplus cash flow had $50million to invest last March 20, 2015 and the corporation did not believe it would need to utilize these funds to retool or expand production capacity for 1 year. What must the ..

  Potential disadvantages of the limited partnership

Limited partnership arrangements alleviate which traditional problem associated with real estate investments.

  Discuss the impacts of marginal utility

Discuss the impacts of marginal utility. Imagine that you are a seller of sunglasses: How can you increase the consumer demand curve by helping increase the marginal utility for consumers? Detail specific steps to take and provide examples.

  Funding for the performing arts

What is the breakdown between earned and no neared funding for the performing Arts?

  Product of the scottish enlightenment

Adam Smith was a product of the Scottish enlightenment. Why is this important? Summarize his political-economic vision and his main contributions including his theory of moral sentiment, the division of labor and its implications, his theories of val..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd