Is the beta likely to keep decreasing over time

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Question: The chief financial officer of Adobe Systems, a growing software manufacturing firm, has approached you for some advice regarding the beta of his company. He subscribes to a service which estimates Adobe System's beta each year, and he has noticed that the beta estimates have gone down every year since 1991 - 2.35 in 1991 to 1.40 in 1995. He would like the answers to the following questions -

a. Is this decline in beta unusual for a growing firm?

b. Why would the beta decline over time?

c. Is the beta likely to keep decreasing over time?

Reference no: EM131683045

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