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Would you please explain how they got the answers that I got wrong? Thanks :) Question2: Score 0.8/2 Show all attempts The CFO of MediSearch
Would you please explain how they got the answers that I got wrong?
Thanks :)
Question2: Score 0.8/2 Show all attempts 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 = 11%, the volatility of the market index is OM = 9.3%, and the risk-free asset earns Rf = 5.6%. 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 op M = 0.0097 (in decimal form). What is the beta of the project? Enter your answer rounded to two decimal places. Your response Correct response 1.12 1.120.01 Grade: 1/1.0 1.0x1/1 = 1.00 According to the CAPM, what should be the required return of the project given its beta of 1.12? Enter your answer rounded to two decimal places. Your response Correct response 12 11.65:0.01 Grade: 0/1.0 0.0x1/1 = 0.00 Correct response Should the CFO accept the project? Your response Yes * Grade: 0/1.0 0.0x1/1 = 0.00Step by Step Solution
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