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Hi john, i have watched your lectures on capm to understand asset beta but i still have doubt on part b(i)
To get the asset beta of travel services, why do we have to use The book value of non current assets 30% and 70% to get the asset beta ?
Since morada co asset beta is 0.94 and 0.65 is the asset beta of the repairs and maintenance services , cant i just use 0.29
0.94 – 0.65 = 0.29
As an asset beta of travel services ?The question specifically says that the proportion of the book value of non-current assets invested in each business unit gives a fair representation of the size of each business units, and it is the size of the units that is relevant.
then if “proportion of the book value of non-current assets invested in each business unit gives a fair representation of the size of each business units” isn’t stated in the question, then can i use 0.29 as an asset beta of travel services ?
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