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The beta for a firm should reflect the "discretionary” nature of its products and/or services; the more discretionary a product or service is, the higher you would expect the beta to be
The beta for a firm should reflect the "discretionary” nature of its products and/or services; the more discretionary a product or service is, the higher you would expect the beta to be. Given this principle, which of the following has the lowest beta? Select one: O a. High End Department store (Bergdorf Goodman) O b. Discount retailer (Walmart) O c. Grocery store (Safeway) O d. Department store (Macy's) O e. Luxury retailer (Tiffany's)
Expert Solution
Answer:
Correct answer is Option "B" i.e. Discount Retailer (Walmart)
The beta for a firm should reflect the "discretionary" nature of its products and/or services; the more discretionary a product or service is the higher you would expect the beta to be.
By following this principle Discount Retailer (Walmart) would have lowest beta.
All the other options are incorrect because Department Store (Macy's) , Luxury Retailer (Tiffany's Co) , Grocery Store (Safeway) , High end departmental store (Bergdorf Goodman) all have less discretionary product or services than Walmart.
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