Average Asset Beta

The examiner is a bit inconsistent on this, sometimes he answers in different ways (which does not matter because for Paper P4 there is never only one correct answer - it depends on assumptions, which is why you are always expected to state your assumptions). However, usually it does make sense to do what Kaplan have done when it is a combined company question. Posts are not always locked. Only when the specific question has been answered. It is because we cannot, and do not, give private tuition free of charge - we answer the specific questions asked.

On the basis of what you typed previously, my previous answer was correct. They are already getting the tax benefit on the existing debt - it is therefore only any additional tax benefit that is relevant. Maybe the question had other relevant information which I am not aware of because I have not seen it.