19 Which one of the following activities in Pepsi would incr

19. Which one of the following activities in Pepsi would increase its beta? a) to reduce cost Pepsi would terminate contract with bottlerleb and to produce bottles in house b) Contract with a labeling company to add colors and labels on produced bottles. c) contract with alo taxi to transport their products to retailers d) enter into a joint venture with a labor company to provide workers e) none of the above

Solution

Option a is correct option
Beta increase when the risk increases if the bottling is done in-house. The more the products are brought from different sources risk of the Pepsi will be similar to the risk of entire market. The volatility of Pepsi with respect to the market will be closely related and Beta will reduce. In other options the business is done with other firms which represents part of the entire market.

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