Consider the case of another company. turnkey printing is evaluating two mutually exvlusive projects. they both require $1 million investment todayand have expected npv's of $200,00. management conducted a full risk analysisof these two projects, and the results are shown below.
risk measure project a project b
standard deviation of expected npv's $80,000 $120,000
project beta 0.9 0.7
correlation coefficient of project cash flows(relative to the firm's existing projects) 0.7 0.5
which of the following statements about these projects' risk is correct?
1.project b has more stand-alone risk than project a
2.project a has more market risk than project b
3.project a has more corporate risk than project b
4.project b has more corporate risk than project a
Answers: 2
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Consider the case of another company. turnkey printing is evaluating two mutually exvlusive projects...
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