You have been asked to estimate the beta for a large South Korean company, with

large holdings in steel and financial services. A regression of stock returns against

the local market index yields a beta of $1\mathrm{.}10.$ You have collected the average betas

for global companies in each of the sectors$,$ as well as the average debt equity

ratios in each sector:

Sector

Avg. Beta

Average D$/$E Ratio

Steel

$1\mathrm{.}20$

$30\%$

Financial Services

$1\mathrm{.}32$

$70\%$

The average tax rate for these firms is $40\%.$ In the most recent period, the company

you are analyzing earned $70\%$ of its operating income from steel and $30\%$ from

financial services. The firm also had a debt$/$equity ratio of $150\%,$ and a tax rate of

$30\%.$

Estimate the beta for the company.