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Taussig Technologies Is Considering Two Potential Projects, X and Y

question 10

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Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following data: Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following data:    Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are <u>not</u> correlated with the cash flows from existing projects. Cash flows are <u>highly</u> correlated with the cash flows from existing projects. Which of the following statements is CORRECT? A) 	Project X has more <u>stand-alone risk</u> than Project Y. B) 	Project X has more <u>corporate (or within-firm)  risk</u> than Project Y. C) 	Project X has more market risk than Project Y. D) 	Project X has the same level of corporate risk as Project Y. E) 	Project X has less market risk than Project Y.
Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash flows are highly correlated with the cash flows from existing projects.
Which of the following statements is CORRECT?

Comprehend the significance of the GDP deflator and inflation in the economic context.
Identify and explain the major components of national income.
Recognize the role of investments, government spending, and net exports in the economy.
Understand how economic growth and inflation affect real GDP per capita.

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