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The firm will become less valuable. The firm will accept too many relatively safe projects. The firm will accept too many relatively risky projects. Generally,
The firm will become less valuable. The firm will accept too many relatively safe projects. The firm will accept too many relatively risky projects. Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets. If this correlation is risk will be a good proxy for within-firm risk. Consider the case of another company. Chrome Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVs of $200,000. Management conducted a full risk analysis of these two projects, and the results are shown below. Which of the following statements about these projects' risk is correct? Check all that apply. Project A has more market risk than Project B. Project A has more stand-alone risk than Project B. Project A has more corporate risk than Project B. Project B has more stand-alone risk than Project A
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