Question
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 8%. The expected return of the market index is RM = 10.9%, the volatility of the market index is M = 11.6%, and the risk-free asset earns Rf = 2.9%. 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 P,M = 0.0081 (in decimal form).
What is the beta of the project? Enter your answer rounded to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started