Question: Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% 0.1% 0.2% 0.45% 2.2% 5.5%

Consider the following information regarding corporate bonds: Rating AAA AA A BBB

Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% 0.1% 0.2% 0.45% 2.2% 5.5% 12.2% Recession Default Rate 0.0% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 0.31 Company Taggart Transcontinental Rearden Metal Wyatt Oil Nielson Motors Market Capitalization Total Enterprise ($mm) Value ($mm) 4,583 3800 2400 1500 7,787 7200 3800 4400 Equity Beta 1.1 1.3 0.9 1.75 Debt Rating BBB AAA A BB Your estimate of the asset beta for Taggart Transcontinental is closest to (2 decimal places):

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