Average Debt Betas by Rating and Maturity
By rating	A and above	BBB	BB	B	CCC
Average beta		0.10	0.17	0.26	0.31
By maturity (BBB and above)		1-5 Yr	5-10 Yr	10-15 Yr	> 15 Yr
Average beta		0.01	0.06	0.07	0.14
Source: S. Schaefer and I. Strebulaev, "Risk in Capital Structure Arbitrage," Stanford GSB working paper, 2009.

Company Name	Market Capitalization ($ million)	Total Enterprise Value ($ million)	Equity Beta	Debt Ratings
Delta Air Lines (DAL)	4,988.1	17,048.5	1.975	BB
Southwest Airlines (LUV)	4,899.1	6,352.9	0.914	A/BBB
JetBlue Airways (JBLU)	1,207.2	3,878.4	1.881	B/CCC
Continental Airlines (CAL)	1,093.6	4,396.2	1.917	B

Score: 0 of 5 pts 6 of 15 (3 complete) HW Score: 15%, 15 of 100 pts P12-22 (similar to) Question Help Consider the following airline industry data from mid-2009: a. Use the estimates in table to estimate the debt beta for each firm (use an average if multiple ratings are listed). b. Estimate the asset beta for each firm. c. What is the average asset beta for the industry, based on these firms? a. Use the estimates in table to estimate the debt beta for each firm (use an average if multiple ratings are listed). The beta of the debt for each company is: (Round to three decimal places.) Debt Ratings BB Debt Beta Equity Beta 1.975 Company Name Delta Air Lines (DAL) Southwest Airlines (LUV) JetBlue Airways (JBLU) Continental Airlines (CAL) Market Capitalization ($ million) 4,988.1 4,899.1 1,207.2 1,093.6 Total Enterprise Value ($ million) 17,048.5 6,352.9 3,878.4 4,396.2 0.914 A/BBB 1.881 B/CCC 1.917 B