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III. Suppose the domestic U.S. beta of IBM is 1.0, that is PBM =1.0, and...

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III. Suppose the domestic U.S. beta of IBM is 1.0, that is PBM =1.0, and that the expected return on the U.S. market portfolio is Rus = 12 percent, and that the U.S. T-bill rate is 6 percent. If the world beta measure of IBM is PM = 0.80 then we can say: world IBM 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% 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 1.2% 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 above

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