One factor that can affect the market risk of a project is its degree of operating leverage, which is

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1. One factor that can affect the market risk of a project is its degree of operating leverage, which is the relative proportion of operating assets versus equity. the relative proportion of operating expenses versus non-operating expenses. the relative proportion of operating assets versus nonoperating assets. the relative proportion of fixed versus variable costs. 2. Which of the following statements is FALSE? Many practitioners analyze other financial characteristics of a firm, when they forecast betas. If a firm where to change industries, using its historical beta would be inferior to using the beta of other firms in the new industry. U.S. Treasuries are never subject to interest rate risk unless we select a maturity equal to our investment horizon. When using historical returns to forecast future betas, we must be mindful of changes in the environment that might cause the future to differ from the past. 3. Various trading strategies appear to offer non-zero alphas when we examine real world data. If indeed these alphas are positive, it could be explained by any of the following except: The positive alpha trading strategies contain risk that investors are unwilling to bear but the CAPM does not capture. The market portfolio is inefficient, but the market portfolio proxy used to calculate the alphas is efficient. A stock's beta with the market portfolio does not adequately measure a stock's systematic risk. Investors are systematically ignoring positiveNPV investment opportunities