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

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

A) 1.01
B) 1.53
C) 0.93
D) 1.13

Correct Answer:

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