Port Company is ﬁnanced entirely by equity and has three divisions. Division A is the stable products division, and has a beta of 0.8. Division B takes only projects with the same risk as the
Market portfolio. Division C is the research and development division, where the average beta of
Projects taken is 1.6. The ﬁrm's assets are divided equally (both in terms of market value and book
Value) among the three divisions. What is the beta of the ﬁrm?
A) 0.80
B) 1.00
C) 1.03
D) 1.13
E) 1.33

Question

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The Answer of Port Company is ﬁnanced entirely by equity and has three divisions. Division A is the stable products division, and has a beta of 0.8. Division B takes only projects with the same risk as the
Market portfolio. Division C is the research and development division, where the average beta of
Projects taken is 1.6. The ﬁrm's assets are divided equally (both in terms of market value and book
Value) among the three divisions. What is the beta of the ﬁrm?
A) 0.80
B) 1.00
C) 1.03
D) 1.13
E) 1.33

Port Company Is ﬁNanced Entirely by Equity and Has Three