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Suppose the domestic U.S beta of IBM is 1.0, and that the expected returns on...

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Finance

Suppose the domestic U.S beta of IBM is 1.0, and that the expected returns on the U.S market portfolio and the world market portfolio are both 10 percent, and that the U.S. T-Bill rate is 6 percent. If the world beta measure of IBM is 0.7, 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 13.64% 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 12% lower than if U.S markets were segmented
c)No sufficent information is available
d)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

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