ETA AND THE REQUIRED RATE OF RETURN ECRI Corporation is a holding company will ur main subsidiaries. The percentage of its capital invested in each of the subsidiarie and their respective betas) are as follows: Subsidiary Electric utility Cable company Real estate development International/special projects a. What is the holding company's beta? Percentage of Capital Beta 6096 0.70 0.90 10 1.30 1.50 b. If the risk-free rate is 4% and the market risk premium is 5%, what is the holding company's required rate of return? ECRI is considering a change in its strategic focus; it will reduce its reliance on the electric utility subsidiary, so the percentage of its capital in this subsidiary will be reduced to 50. At the same time, it will increase its reliance on the international/ special projects division, so the percentage of its capital in that subsidiary will rise to 15. What will the company's required rate of return be after these changes?