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A company is deciding whether to issue stock to raise money for an investment project that has the same risk as the market and an
A company is deciding whether to issue stock to raise money for an investment project that has the same risk as the market and an expected return of 15%. If the risk-free rate is 5%, and the expected return on the market is 12%, the company should go ahead:
1. This is false. The company should not take this project.
2. Regardless of the companys beta.
3. Unless the companys beta is greater than 1.25.
4. Unless the companys beta is less than 1.25.
(No more option, you only can calculate and define one of action which should be took by the company.)
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