IBM Has a Beta of 1

question 24

Multiple Choice

IBM has a beta of 1.0 and Apple Computer has a beta of 3.0. Which of the following statements must be correct?

• A) The market risk premium for Apple must be larger than the market risk premium of IBM.
• B) If investors become more risk averse, the expected return of Apple will increase more than the expected return on IBM.
• C) Apple's expected rate of return must be three times as large as IBM's.
• D) none of these choices are correct.

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Definitions:

Socialization

The process through which individuals learn and adopt the norms, values, behaviors, and social skills appropriate to their society.

Collectivism And Individualism

A cultural dimension that describes the degree to which societies emphasize interdependence and cohesion versus autonomy and personal achievement.

Dietary Insufficiencies

Inadequate intake of nutrients and essential dietary components necessary for healthy living and body function.

Developed Countries

Nations with relatively high levels of economic development and standard of living, including advanced infrastructures and educational systems.