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You have just run a regression of montly returns on MAD Inc. a newspaper and magazine publisher, against returns on the S and P 5

You have just run a regression of montly returns on MAD Inc. a newspaper and magazine publisher, against returns on the S and P 500, and have arrived at the following result:
Rmad=-0.5%+1.20randp
The regression has an R squared of 22%. The current T bill rate is 5.5% and the current T bond rate is 6.5%. The risk free rate during the period of the regression was 6%. Answer the following questions relating to the regression:
a. Bassed on the intercept, how well or badly did MAD do, relative to expectations, during the period of the regression.
b. You realize that MAD Inc. went through a major restructuring at the end of last month (which was the last month of your regression), and made the following changes:
The firm sold off its magazine division, which had an unlevered beta of 0.6, for $20 million.
It borrowed an additional $20 million and bought back stock worth $40 million.
After the sale of the division and the share repurchase, MAD Inc. had $40 million in debt and $120 million in equity outstanding.
If the firms tax rate is 40%, re-estimate the beta, after these changes.

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