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

question 18

Multiple Choice

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

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Definitions:

Exporters

Companies or individuals that sell goods and services produced in one country to buyers in other countries.

Foreign Exchange Market

The market where one country’s currency is traded for another’s.

Spot Exchange Rate

The exchange rate on a spot trade.

Forward Exchange Rate

The agreed-on exchange rate to be used in a forward trade.