Which of the Following Makes This a True Statement? Ideally

question 61

Multiple Choice

Which of the following makes this a true statement? Ideally, when searching for a beta for a new line of business

• A) one could find other firms engaged in the proposed new line of business and use their betas as proxies to estimate the project's risk.
• B) one would like to find at least three or four pure-play proxies.
• C) two (or even one) proxies might represent a suitable sample if their line of business resembles the proposed new project closely enough.
• D) All of these choices are correct.

Understand how to analyze financial statements to determine ratios crucial for assessing operational capacity.

Calculate and interpret the capital intensity ratio.

Understand and calculate the earnings retention ratio.

Determine the external financing need based on changes in sales and operational capacity.