Tallant Technologies Is Considering Two Potential Projects,X and Y

question 9

Multiple Choice

Tallant Technologies is considering two potential projects,X and Y.In assessing the projects' risks,the company estimated the beta of each project versus both the company's other assets and the stock market,and it also conducted thorough scenario and simulation analyses.This research produced the following data:
Correlation of the project cash flows with cash flows from currently existing projects.Cash flows are not correlated with the cash flows from existing projects.Cash flows are highly correlated with the cash flows from existing projects.
Which of the following statements is CORRECT?

• A) Project X has more corporate (or within-firm) risk than Project Y.
• B) Project X has more market risk than Project Y.
• C) Project X has the same level of corporate risk as Project Y.
• D) Project X has less market risk than Project Y.
• E) Project X has more stand-alone risk than Project Y.

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Definitions:

Millennial Generation

A demographic group consisting of individuals born approximately between 1981 and 1996, known for their familiarity with communications, media, and digital technologies.

Labor Supply

The total hours that workers in an economy are willing and able to work at a given overall wage rate.

Wages

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Factors of Production

The inputs used in the production of goods or services in the process of creating economic value; these typically include land, labor, capital, and entrepreneurship.