Question

Which of the following methods involves calculating an average beta for firms in a similar business and then applying that beta to determine the beta of its own project? A. Risk premium method. B. Pure play method. C. Accounting beta method. D. CAPM method.

Answer 1

B

Step-by-step explanation:

Pure play method

Pure play method is an approach nvolves calculating an average beta for firms in a similar business and then applying that beta to determine the beta of its own. Companies use this method to try and identify publically traded firms that are engaged in projects similar to the one they are intending to do