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Xenon is considering a new project. The expected return on the project is 20%. Xenon believes that the project has a beta of 1.30. The
Xenon is considering a new project. The expected return on the project is 20%. Xenon believes that the project has a beta of 1.30. The T-bill rate is 5% and the return on the S&P 500 (market) is 15%. Will Xenon take the project? Why or why not?
A. | No. Expected return < required return | |
B. | Yes. Expected return < required return | |
C. | No. Expected return > required return | |
D. | Yes. Expected return > required return |
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