Using the CAPM to Calculate the Cost of Capital for a Risky

question 43

Multiple Choice

Using the CAPM to calculate the cost of capital for a risky project assumes that:

• A)using the firm's beta is the same measure of risk as the project.
• B)the firm is all-equity financed.
• C)the financial risk is equal to business risk.
• D)Both A and B.
• E)Both A and C.

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