AFMproxy beta

You find a similar company (which therefore will have a similar level of risk) - the proxy. However, it is the asset beta we need because it is the asset beta that measures the risk of the business (the equity beta is more risky because of the level of gearing and the proxy is unlikely to have the same level of gearing).

And how their weightage is calculated (average asset beta) in ques mercury training (june 08) regards....

When two streams with different betas are combined, then the overall beta is the weighted average of the individual betas. The question says that financial service are 1/3 (0.33) and so training is 2/3 (0.67).

Thank you sir

You are welcome :-)