Review the table below. Beta is a measure of sensitivity, showing how the returns of an individual investment compare to the returns of the Market as a whole. Beta is measured by analyzing actual historic Market returns. Starbucks sells coffee. What might explain why a company like Starbucks has its Beta at that level ?

Company Beta

US Steel 1.77

Ford Mo Co 1.31

General Electric 1.20

Boeing 0.94

Amazon 0.90

Starbucks 0.79

McDonalds 0.51

Walmart 0.26

Market Details

Current T-Bill Price 985.12

Historic Average T-Bill Return 2.3%

Current Market Return 8.5%

Historic Average Market Return 8.9%

Multiple Choice The cash flows generated by Starbucks come from the sale of items that might be considered by consumers to be necessities and therefore the sensitivity is less than average. The cash flows generated by Starbucks come from the sale of items that might be considered by consumers to be necessities and therefore the sensitivity is more than average. none of the choices listed The cash flows generated by Starbucks come from the sale of items that might be considered by consumers to be luxuries and therefore the sensitivity is more than average. The cash flows generated by Starbucks come from the sale of items that might be considered by consumers to be luxuries and therefore the sensitivity is less than average.