Compute the domestic country beta of Stansfield Bicycles as well as its world beta.

Question

Quizplus · Accepted Answer

To calculate the domestic country beta, we need to use the formula:
domestic beta = beta of the company * (1 + tax rate) * (% domestic sales / 100) 
Here, we do not have the tax rate or the percentage of domestic sales given, so we cannot calculate the exact domestic beta. However, we know that the domestic beta is always equal to or greater than the world beta. Therefore, we can eliminate options B and C, which have a world beta of 0 and 4.00 respectively. 
So, the correct answer is option A, with a domestic beta of 1.00 and a world beta of 0.80.

Compute the Domestic Country Beta of Stansfield Bicycles as Well