SCAN is a multi-divisional utility company. SCAN has four divisions with the following betas and proportions of the firm's total assets: ? $\begin{array}{lcc}
\text { Division } & \text { Beta } & \% \text { of Assets } \
\text { Electric \& Gas } & 0.85 & 60 \
\text { Bus transportation } & 0.95 & 10 \
\text { Real estate } & 1.40 & 25 \
\text { Recreation } & 1.15 & 5
\end{array}$ ?
What is the firm's weighted average beta?
A) 1.01
B) 1.53
C) 0.93
D) 1.13

Question

Quizplus · Accepted Answer

The firm's weighted average beta is calculated by multiplying each division's beta by its proportion of total assets and summing the results: (0.85 * 0.60) + (0.95 * 0.10) + (1.40 * 0.25) + (1.15 * 0.05) = 1.01.

SCAN Is a Multi-Divisional Utility Company ? What Is the Firm's Weighted Average Beta? A) 1

SCAN Is a Multi-Divisional Utility Company ?
What Is the Firm's Weighted Average Beta?
A) 1