Question
Humongous Corporation is a multidivisional conglomerate. The Food Division is undergoing a capital budgeting analysis and must estimate the division's beta. This division has a
Humongous Corporation is a multidivisional conglomerate. The Food Division is undergoing a capital budgeting analysis and must estimate the division's beta. This division has a different level of systematic risk than is typical for Humongous Corporation as a whole. The most appropriate method for estimating this beta is ________. A. The regression coefficient from a time series regression of Humongous Corporation stock returns on a market index B. The regression coefficient from a time series regression of Food Division's return on assets on a market index C. To multiply the company's beta by the ratio of the Food Division's total assets/Humongous Corporation total assets D. The regression coefficient from a time series regression of Food Division's net income on the Humongous Corporation's return on assets
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