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:

Gross Requirements

The total amount of materials or products needed to meet the production schedule without accounting for any inventories on hand.

Lead Time

The amount of time that elapses between the initiation and completion of a process or project.

Time-Phased Product Structure

A detailed breakdown that shows the timeline on which components must be assembled or produced to complete a final product.

Bill of Material

A comprehensive list of raw materials, assemblies, and sub-assemblies needed to manufacture or repair a product or service.