Question
Which of the following statements is INCORRECT about the projects risk? a. Corporate risk can be measured by measuring the covariance or the correlation of
Which of the following statements is INCORRECT about the projects risk?
a. Corporate risk can be measured by measuring the covariance or the correlation of cash flows between multiple projects within the firm.
b. Stand-alone risk can be measured by looking at the standard deviations of the projects NPV.
c. Market risk is theoretically the most relevant measure of risk to the manager, but in practice, stand-alone risk is often sufficient as stand-alone risk is likely to be positively correlated with the market risk.
d. Market risk can be measured by companys beta.
e. Project risk is important because higher risk project should be discounted by a lower rate of return (WACC).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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