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WSP Inc. is involved in a wide range of unrelated projects. The company will pursue any project that it thinks will create value for its
WSP Inc. is involved in a wide range of unrelated projects. The company will pursue any project that it thinks will create value for its stockholders. Consequently, the risk level of the company's projects tends to vary a great deal from project to project. If WSP Inc. does not risk-adjust its discount rate for specific projects properly, which of the following is likely to occur over time? Check all that apply. The firm will reject too many relatively safe projects. The firm will make poor capital budgeting decisions that could jeopardize the long-run viability of the Company The firm will become less risky. Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets. If this correlation is stand-alone risk will be a good proxy for within-firm risk
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