Which of the Following Statements About Applying the CAPM Is

question 38

Multiple Choice

Which of the following statements about applying the CAPM is true?

• A)In reality, many knowlegable CFOs do not calculate project-specific costs of capital because it is often too difficult to obtain a good estimate for a project's beta.
• B)Although a large number of CFOs do not calculate a specific cost of capital for each and every project, they typically do use different hurdle rates for different types of projects,
• Rather than using only the firm's overall cost of capital to evaluate all projects regardless of
• The risk.
• C)A good CFO will calculate his or her own estimate of an appropriate market-beta for a project to use when applying CAPM.
• D)All knowledgeable CFOs always use project-specific costs of capital in the CAPM when evaluating projects.

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