Currently,Powell Products Has a Beta of 1

question 48

Multiple Choice

Currently,Powell Products has a beta of 1.0,and its sales and profits are positively correlated with the overall economy.The company estimates that a proposed new project would have a higher standard deviation and coefficient of variation than one of the company's average projects.Also,the new project's sales would be countercyclical in the sense that they would be high when the overall economy is down and low when the overall economy is strong.On the basis of this information,which of the following statements is correct?

• A)The proposed new project would have more stand-alone risk than the firm's typical project.
• B)The proposed new project would increase the firm's corporate risk.
• C)The proposed new project would not affect the firm's risk at all.
• D)The proposed new project would have less stand-alone risk than the firm's typical project.

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Definitions:

Field Size

The specified or maximum amount of data that can be stored in a database field or table column.

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A template that sets the format for entering data, such as phone numbers or social security numbers, to ensure data is entered into a database correctly.

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A condition or item that is deemed necessary or obligatory for a particular purpose or outcome.

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A feature in database software that allows you to view and enter related data in a table or query nested within another datasheet.