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?

Answer 1

Answer:

Microsoft was doing good till 1990's because there was no competition at that time and they were the only operation system known, but when internet market was getting other competitors Microsoft's risk increased they couldn't compete with them.

Explanation:

Systematic beta reflects the risk which is present in the market and difficult to avoid.

• Microsoft was doing great when and the reason they got on top was because there was no competitor so they weren't at risk.
• But since the technological industry is enhancing Microsoft didn't adapt to change and continued with their old strategy which led them at this condition as there risk is increasing they are highly volatile to the market.