A Project Is Determined to Have Equal Probability of Generating

question 100

Multiple Choice

A project is determined to have equal probability of generating $1 million annually or $500,000 annually for four years.The initial outlay is $2 million.The expected return on Treasury bills is 6% and the market risk premium is 8%.What is the highest project Beta that will justify acceptance of the project?

• A)0.0
• B)1.00
• C)1.56
• D)2.31

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Definitions:

Anticipation

The act of looking forward to or expecting something in the future, often involving preparation or foresight.

Reformers

Individuals or groups advocating for changes or improvements in society, institutions, or systems.

Innovators

Individuals or entities that introduce new ideas, devices, or methods, often leading change within their field.

Plodders

Individuals who proceed or work slowly and laboriously, often showing perseverance and persistence in tasks.