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.

---

Definitions:

Limited Partnership

A business structure where one or more partners have limited liability, and at least one partner has unlimited liability.

Day-to-Day Business Management

The continuous, routine operations and activities involved in the administration and control of a company or organization.

Architectural Firm

A business entity specializing in providing services related to the design, planning, and oversight of building construction or landscape projects.

Entrepreneurial Firms

Businesses that are in their initial stages, focusing on innovating and rapidly growing in their respective markets.