Euity qBeta of Hotdog = 0.9
Answer:
Nos of Equity Share = 25 Million
Current Share Price 30
HHI Equity=25 × 30 = 750
HHI Debt = 66 Million
Beta of Equity of HHI = 1.36
Beta of debt of HHI = 0
HHI Assets Beta = Equity Beta × Equity/(Equity + debt) + Debt
Beta + Debt/(Equity + debt)
= 1.21
Holdings of hotdogs = 843/2= 421.5
Therefore Value of Hockey Team = (750 + 64) - 421.5= 392.5
Hotdog Equity beta = (843/1090) × Equity beta + (247/1090) × 0 = 0.74
Hotdog Equity beta = 0.96
HHI Assets Beta = 1.21
(421.5/(421.5 + 392.5)) 0.96 + (392.5/(421.5 + 392.5)) × Beta of Hockey team = 1.21
0.4971 + 0.4822 × Beta of Hockey team = 1.21
after solving Beta of Hockey team = 1.48