IBM Has a Beta of 1

question 79

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 complete.

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Definitions:

Exam Scores

Quantitative assessments used to measure a student's academic performance in a course or test.

Hours Spent Studying

A quantitative measure indicating the amount of time someone dedicates to study activities.

Predictor Variables

Variables that are used in statistical models to predict or forecast another variable of interest.

Degrees of Freedom

A statistical concept that describes the number of independent values that can vary in an analysis without violating any constraints.