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Assume that electric pumps and detergents are two industries with distinct risk and retum. You have been asked to estimate the beta of each of

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Assume that electric pumps and detergents are two industries with distinct risk and retum. You have been asked to estimate the beta of each of these industries. Unfortunately, you do not have access to data of companies who produce only electric pumps or detergents . However, there are two companies who produce both electric pumps and detergents. The following table summarizes available information: Company Networth ($ million) Networth of Electric Beta of company of Detergents division Pumps division (5 million) 19.5 10.5 0.95 14 26 0.99 ABC DEF Use property of beta to estimate the beta of Electric pumps and Detagents division? Use division's net worth proportion as the weights. [10]

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