Question
We run a delivery service, and we believe our firm has market riskequally betweenthat of UPS and FedEx. We know the following about these 2
We run a delivery service, and we believe our firm has market riskequally betweenthat of UPS and FedEx. We know the following about these 2 firms:
Stock Price per share# shares outstandingMarket Value of DebtUPS$650.7 billion$ 5 billionFedEx$55250 million$ 3 billion
We also have the following data on the securities of these firms:
BetaEBetaDUPS0.80FedEx1.10.1
Assume that our firm hasrisk-free debtwith market value $20 million and equity with market value $450 million. Assume that taxes are not relevant. Please estimate our firm's equity beta.
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
