Buhoo is an Egyptian company. The outcome of a regression of Buhoo monthly stock returns against market monthly returns is as follows:

$()Buhoo()SP$

What is the beta estimate for Buhoo?

One possible correct answer is: $0\mathrm{.}85$

$2.$ Is Buhoo's stock riskier than the market?

If Buhoo is riskier than the market, type $1$ in the answer box.

If Buhoo is less risky than the market, type $2$ in the answer box.

If you need more information to answer this question, type $3$ in the answer box.

$2$

One possible correct answer is: $2$

$3.$ If the average risk$-$free rate during the regression period was $5\%,$ estimate Jensen's alpha for Buhoo, in annualized terms.

One possible correct answer is: $-0\mathrm{.}13091746660851$

$4.$ During the period of the regression, Buhoo was in the Fashion business ONLY and had an average debt$-$to$-$equity ratio of $30\%.$ What is the business risk for the fashion business assuming a tax rate of $40\%?$

$0\mathrm{.}7203$

One possible correct answer is: $0\mathrm{.}72033898305085$

$5.$ Buhoo is considering investing in the magazine business. The average beta of firms specializing in the magazine business is $1\mathrm{.}3,$ and these firms have an average debt$-$toequity ratio of $20\%$; they face an average tax rate of $35\%.$ Estimate the business risk $($unlevered beta$)$ for the magazine business.

$6.$ Buhoo expects that half of its future revenues and earnings will come from the magazine business. Estimate the unlevered beta for Buhoo looking forward $($that is for being in both the fashion and the magazine businesses$).$

$0\mathrm{.}9353$

One possible correct answer is: $0\mathrm{.}93539073046348$

$7.$ If Buhoo currently has $5m$ shares at a $1$$ per share and $4m$$ debt, and plans to maintain the same debt to equity ratio for the foreseeable future, estimate the beta for Buhoo looking forward $($that is for being in the fashion and magazine businesses$).$

Use this table for sections $8,9$ and $10$ below.

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