An increase in nondiversifiable risk
A) would have no effect on the beta and would, therefore, cause no change in the required return.
B) would cause an increase in the beta and would increase the required return.
C) would cause an increase in the beta and would lower the required return.
D) would cause a decrease in the beta and would, therefore, lower the required rate of return.
B
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Mary Barra, CEO of General Motors, has asked you to evaluate the financial resource fit of its new autonomous (self-driving) vehicle and electric vehicle (EV) divisions. You would advise CEO Barra that a diversified company's business units exhibit good financial resource fit when
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