Suppose the Domestic U

question 60

Multiple Choice

Suppose the domestic U.S. beta of IBM is 1.0, that is and that the expected return on the U.S. market portfolio is percent, and that the U.S. T-bill rate is 6 percent. If the world beta measure of IBM is then we can say

• A)That if the U.S. markets are fully integrated with the rest of the world, IBM's cost of equity capital would be 20% lower than if U.S. markets were segmented.
• B)That if the U.S. markets are fully integrated with the rest of the world, IBM's cost of equity capital would be 10% lower than if U.S. markets were segmented.
• C)That if the U.S. markets are fully integrated with the rest of the world, IBM's cost of equity capital would be one-third lower than if U.S. markets were segmented.
• D)None of the above

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Definitions:

Observational Learning

A learning process where individuals acquire new behaviors, skills, or attitudes through watching others.

Electric Shock

A sudden discharge of electricity through a part of the body, causing injury or physiological disruption.

Fear

An unpleasant emotion caused by the belief that someone or something is dangerous, likely to cause pain, or a threat.

Stimulus Generalization

The tendency for the conditioned response to be evoked by stimuli that are similar to the stimulus that was conditioned.