An increase in the beta of a corporation indicates an increase in risk and, all else being the same, results in a higher required rate of return, and hence a lower share price.
The increase in risk should be offset by a higher needed rate of return. The lower share price is therefore the most suitable so that it might have a bigger upside risk in comparison to its current risk.
The capability of raising capital by selling shares to investors is one of the major benefits of structuring your company as a corporation. But stock buyers don't do it out of politeness.
They anticipate receiving a return on their investment, and the more the risk they accept, the larger return they anticipate. Investors pay particular attention to a company's "beta," a gauge of the stock's susceptibility to risk, for this reason.
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