Suppose the Domestic U $\overline { \mathcal { R } } \text { U.S. }$

Multiple Choice

Suppose the domestic U.S.beta of IBM is 1.0,that is    _U.S
?  _IMB = 1.0,and that the expected return on the U.S.market portfolio is $\overline { \mathcal { R } } \text { U.S. }$ = 12 percent,and that the U.S.T-bill rate is 6 percent.If the world beta measure of IBM is    _world
?  _IMB = 0.80 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 percent 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 percent 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 options