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Standard finance theory predicts that management should maximize the value of the firm by selecting investment projects whose NPV is positive and rejecting projects whose

Standard finance theory predicts that management should maximize the value of the firm by selecting investment projects whose NPV is positive and rejecting projects whose NPV is negative. Consider an all-equity firm. Under what conditions might management incorrectly apply the CAPM such that they accept negative NPV investments or reject positive NPV investments? Explain.

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