For the CAPM model, what beta should I choose for a beverage company:average beta for that industry, unlevered beta or unlevered beta corrected for cash? What is the difference between these 3 betas?
Thank you.

Question

anonymous · Answer

The average beta is a regression beta, reflecting a levered beta. The unlevered beta is the beta for the entire company, including its cash holdings (cash has a beta of zero). The unlevered beta corrected for cash is the beta for just for the operating assets of the company. If you are looking for a beta for being in the beverage business, you should use the last one.