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The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term
The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 11%. The expected return of the market index is RM = 9.5%, the volatility of the market index is oM = 11.2%, and the risk-free asset earns = 3.7%. The CFO has studied similar projects of other companies and believes that the covariance between the returns of this project and the returns of the market is , = 0.0053 (in decimal form). RE
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