The CAPM beta is a measure of relative risk, but it comes with signicant baggage (a belief in modern portfolio theory, a trust that stock prices are driven by fundamentals, an assumption of liquidity). Assume that you want a measure of relative risk that is not dependent upon assumptions of diversied investors and credible stock prices. Which of the following would you use as your relative risk measure? a. A ratio of standard deviation in your company's stock price to the average standard deviation across all stocks b. An implied beta, backed out of current stock prices and expected future cash ows A ratio of the standard deviation in your company's historical earnings to the average standard deviation in earnings of other companies in the market (1. The PE ratio for your firm, relative to the average PE ratio of other rms in the market (Low : Less risky) e. None of the above 9