The following are beta\'s for a Microsoft during four time periods. Compare the

Question

The following are beta's for a Microsoft during four time periods. Compare the four estimated betas What do you conclude about how Microsoft's exposure to systematic risk has changed over that 20-year period? What do you think explains the change? Which of the following statements is true? (Select the best choice below) A. Microsoft's systematic risk decreased in the early 1990s as Microsoft established itself as the dominant operating system company, and decreased during the internet bubble in the late 1990s (when tech stocks were soaring). It has since increased B. Microsoft's systematic risk increased in the early 1990s as Microsoft established itself as the dominant operating system company, but increased during the internet bubble in the late 1990s (when tech stocks were soaring). It has since decreased. C. Microsoft's systematic risk decreased in the early 1990s as Microsoft established itself as the dominant operating system company, but increased during the internet bubble in the late 1990s (when tech stocks were soaring). It has since increased. D. Microsoft's systematic risk decreased in the early 1990s as Microsoft established itself as the dominant operating system company, but increased during the internet bubble in the late 1990s (when tech stocks were soaring) It has since decreased.

Explanation / Answer

For comparing the four estimated beta's,

Microsoft's systematic rist decreased in the early 1990's as Microsoft establised itself as the dominant operating software company. But increased during the internet bubble in the late 1990's when tech stocks were soaring. It has since decreased.

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