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What is agw asset beta

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Austin Gas and water (AGW) currently operates with a debt to value ratio of LaTeX: frac{D}{V_L}=.60D V L = .60, and the rate of return on debt is LaTeX: r_D:=:.11r D = .11 (this is also the riskless rate). Suppose that AGW's equity beta is LaTeX: beta_E = 1 β E = 1, and suppose also that the rate of return on the market portfolio is LaTeX: r_M = .16r M = .16.

What is AGW's asset beta (i.e., calculate LaTeX: beta_Aβ A).

Group of answer choices

.60.

.11.

1.0.

.40.

Reference no: EM132494243

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