IBM Has a Beta of 1

question 19

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 statements are correct.

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Definitions:

Stereochemistry

The study of the spatial arrangement of atoms in molecules and the effects of this arrangement on the properties of the molecules.

Organic Product

A chemical compound or substance that has been produced through organic chemistry, typically derived from living organisms.

Major

(Rephrased) Pertaining to the main or largest part of something, often used to describe the primary outcome or component in various contexts.

Neopentyl Alcohol

A tertiary alcohol that is structured with four carbon atoms making up the neopentyl group, known for its use in organic synthesis.