The chief financial officer of BitSoftware, a growing software manufacturing firm, has approached you for some advice regarding the beta of his company. He subscribes to a service that estimates have gone down every year since 2010 from 2.35 in 2010 to 1.4 in 2015. He would like the answers to the following questions:

1. Is this decline in beta unusual for a growing firm? Why would the beta decline over time? (20 marks)
2. Is the beta likely to keep decreasing over time? (20 marks)