Use the following information to answer the question(s) below.
Consider the following information regarding corporate bonds:

-Suppose that because of the large need for steel in building railroad infrastructure,Taggart Transcontinental and Rearden Metal decide to into one large conglomerate.Your estimate of the asset beta for this new conglomerate is closest to:
A) 0.42
B) 0.59
C) 0.66
D) 0.68

Question

Use the following information to answer the question(s) below.
Consider the following information regarding corporate bonds:
  
-Suppose that because of the large need for steel in building railroad infrastructure,Taggart Transcontinental and Rearden Metal decide to into one large conglomerate.Your estimate of the asset beta for this new conglomerate is closest to:
A) 0.42 
B) 0.59 
C) 0.66 
D) 0.68

Quizplus · Accepted Answer

D) Since Taggart has a rating of BBB, the appropriate debt beta from the table is 0.10. 11ea7e54_8c64_0858_ba34_bd169fdb9964_TB1620_00 Since Rearden has a rating of AAA, the appropriate debt beta from the table is 0.05. 11ea7e54_8c64_0859_ba34_093f4150fa08_TB1620_00 11ea7e54_8c64_2f6a_ba34_7d0dc5b5118d_TB1620_00

Use the Following Information to Answer the Question(s) Below