Estimate the beta of hhis investment in the hockey team

Assignment Help Financial Management

Reference no: EM131906127

Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $39 per share. HHI has 24 million shares outstanding, as well as $62 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 $888 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 0.75. 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 1.34. Given thisinformation, estimate the beta of HHI's investment in the hockey team.

Reference no: EM131906127

Questions Cloud

Corporate strategies in internationalizing cost of capital : Sourcing capital abroad usually follows a logic path. List in sequential order three corporate strategies in internationalizing the cost of capital.

Identify the stating assumptions if appropriate : Analyze the cause or causes that can emerge from having a 4 day work week (10 hour days) in 100 words. Identify the relevant issues, stating assumptions.

What are the costs of inflation : High rate of inflation is considered bad for the economy since it has various costs. What are the costs of inflation?

How do the federal reserve policies affect us as individuals : How does it affect the firm or organization you work for? How do the Federal Reserve policies affect us as individuals (households)?

Estimate the beta of hhis investment in the hockey team : Harrison Holdings, Inc. (HHI) is publicly traded, with a current share price of $39 per share. Estimate the beta of HHI's investment in the hockey team.

Report the resulting levels of production : Show how to derive the Cournot equilibrium in this market, and report the resulting levels of production for each firm and market price.

How could parents prepare to adopt or foster the children : How could parents prepare to adopt or foster the children you have identified? What are some ways you could prepare these children for adoption or foster care?

What is kgc profit at the profit maximizing sales price : KGC's marginal revenue function is MR = 50 - (1/200) Q and demand function is Qd = 20,000 - 400P. What is KGC's profit at the profit maximizing sales price?

Define the Key Terms - Accounting cycle and Clearing account : Define the following Key Terms. Key Terms - Accounting cycle, Clearing account, Current ratio, Income summary and Real (permanent) accounts

User Account

All Pages