Question: If the beta of BP , an oil gas company , is 1.2 and beta of Wolsely , a distributor of plumbing and heating products is 1.54 .
i. Explain what the values of the betas (the slope coefficients in the regression) indicate and discuss the factors that might explain the differences in the values of the betas of the two companies.
ii. Comment on the implications of the estimated value of beta for investors and the cost of capital for the two companies.