Which of the Following Statements About Project Risk Analysis in Not-For-

question 2

Multiple Choice

Which of the following statements about project risk analysis in not-for- profit firms is incorrect?

• A) The market risk of a project is not relevant to not-for-profit firms.
• B) A project's corporate beta measures the contribution of the project to the overall corporate risk of the firm.
• C) A project's corporate beta is found (at least conceptually) by regressing returns on the project against returns on the market portfolio.
• D) A project's corporate beta is defined as (\(\sigma\)P/\(\sigma\)F)rPF, where \(\sigma\)P is the standard deviation of the project's returns, \(\sigma\)F is the standard deviation of the firm's returns, and rPF is the correlation among the two sets of returns.
• E) In practice, it is usually difficult, if not impossible, to directly measure a project's corporate risk, so project risk analysis typically focuses on stand-alone risk.

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