For a Multi-Product Firm, If a Project's Beta Is Different

question 37

Multiple Choice

For a multi-product firm, if a project's beta is different from that of the overall firm, then:

• A) the CAPM can no longer be used.
• B) the project should be discounted using the overall firm's beta.
• C) the project should be discounted at a rate commensurate with its own beta.
• D) the project should be discounted at the market rate in all cases.
• E) the project should be discounted at the T-bill rate in all cases.

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