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Question 3 (10 marks) You have been asked to estimate the beta of a technology...

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Question 3 (10 marks) You have been asked to estimate the beta of a technology firm which has three divisions with the following characteristics: Division Beta Market Value Personal Computers 1.10 $150 million Software 1.70 $250 million Computer Mainframes 1.20 $100 million a) What is the beta of the firm? (3 marks) b) What would happen to the beta if the firm divested itself of its software business? (6 marks) c) If you were asked to value the software business for the divestiture, which beta would you use in your valuation? (1 mark)

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