QUESTION 1 Which of these are determinants of beta? 1. Financial leverage II. Cyclicality of revenues III. State of the economy IV. Operating leverage O I and IV only Oll and Ill only O I, III, and IV only O I, II, and IV only O II, III, and IV only QUESTION 2 A project has an internal rate of return of 12.80 percent and a beta of 1.75. The market rate of return is 8.6 percent, the tax rate is 25 percent, and the risk-free rate is 2.7 percent. Should this project be accepted according to the CAPM if the firm is all-equity financed? Why or why not? No; The CAPM rate is 12.90 percent. No; The CAPM rate is 13.03 percent. No; The CAPM rate is 11.97 percent. Yes; The CAPM rate is 12.45 percent. Yes: The CAPM rate is 13.05 percent