Espinosa Coffee & Trading, Inc.'s common stock measured beta is calculated to be 0.75. The market beta is, of course, 1.00 and the beta of the industry of which the company is a part is 1.10. If Merrill Lych were to calculate an "adjusted beta" for Espinosa's common stock, that adjusted beta would most likely be .

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B. more than 0.75, but less than 1.10

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A. less than 0.75

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C. equal to 1.10

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D. equal to 0.95 {i.e., (1/3) x (0.75 + 1.00 + 1.10)}

Espinosa Coffee & Trading, Inc.'s common stock measured beta is calculated to be 0.75. The market beta is, of course, 1.00 and the beta of the industry of which the company is a part is 1.10. If…

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