Question
You are a manager of a company and need to decide whether to undertake the following project. The project offers a 10% expected rate of
You are a manager of a company and need to decide whether to undertake the following project. The project offers a 10% expected rate of return. The project's beta is 0.5, the expected market return is 10% and the risk free rate is 0%. Which is the correct decision?
A. | Undertake the project because the return of the project is greater than the return offered in the market for the same level of risk | |
B. | Dont undertake the project because the return offered in the market for the same level of risk is greater than the return offered by the project | |
C. | Undertake the project because the return of the project is lower than the return offered in the market for the same level of risk | |
D. | Dont undertake the project because the return offered in the market for the same level of risk is lower than the return offered by the project |
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