Case Scenario:
Beta is a measure of stock price fluctuation, as compared to an "average" company. If a particular stock has a high beta, that means the price fluctuates. Raising capital equity will be based on seeking out those ventures who thrive on rollercoaster rides in stock value. I am not certain the effect extends further than that. Your last question begs for amplification. If you mean merge businesses which fluctuate in stock price with those who don't, the answer is no. I would combine businesses based on business sense..that is, does it make sense product or service wise to merge. but my instructor said I did not answer all of the questions asked and I should provide at least two pages of better and more detailed information.
1 IBM has a beta of 1.65 what does this beta mean in terms of the overall risk of the company as the shareholders perceive it? What are the implications for raising equity capital for IBM based on this beta?
2 If I were going to select Dell or HP to merge with based on IBM's beta, should I choose to merge with the high beta or low beta company.