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june 12 question 4 tisa co.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › june 12 question 4 tisa co.

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • May 31, 2014 at 10:05 pm #172230
    sanjeeb
    Member
    • Topics: 4
    • Replies: 1
    • ☆

    Hi,

    how it calculated the below in model answer:

    total asset beta= component asset beta x 0.25+ other activity asset beta x 0.75.

    where did the 0.25 (&0.75) came from as I could not figure out in the question.

    thank you in advance.

    June 1, 2014 at 1:27 pm #172339
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    It is because 75% of their equity is invested in other activities (and therefore 25% in component production).
    The overall asset beta is the weighted average of the individual asset betas.

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