Large food processor also distributor is considering

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Q. A large food processor also distributor is considering expansion into a chain of privately owned sports shoe outlets. The food company wishes to estimate the risky discount rate for such investments so as to negotiate a fair price for the acquisition. Unfortunately, there are no stock exchange- listed sports shoe companies with a price history with which a "sports shoe outlet beta" can be estimated. Elucidate however, executives are considering using the price history of another company to estimate the beta. Which of the subsequent companies would be the most appropriate? Elucidate.

1 Another large food companies.

2. A holding company for a football team.

3. A company which manufactures shoes.

4. A chain of swimwear also surfboard stores in California.

Reference no: EM1314922

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