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Nostalgia Inc. is an entertainment company that derives two thirds of its value from the movie business and one third from operating movie theatres. The
Nostalgia Inc. is an entertainment company that derives two thirds of its value from the movie business and one third from operating movie theatres. The company has no debt, no cash and a beta of 0.9. It is considering selling the movie theatre business and returning the cash to stockholders. If the beta of the movie theatre business is 1.00, what will be the beta of Nostalgia after the sale?
a. 0.85
b. 0.90
c. 0.80
d. 0.75
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