Use the Table for the Question(s)below

question 6

Multiple Choice

Use the table for the question(s) below.
Consider the following list of projects:

-Assume that your capital is constrained,so that you only have $500,000 available to invest in projects.If you invest in the optimal combination of projects given your capital constraint,then the total net present value (NPV) for all the projects you invest in will be closest to:

• A)$111,000
• B)$69,000
• C)$80,000
• D)$58.000
• E)$90,000

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Definitions:

Market Portfolio

A portfolio consisting of a mix of all available investments in the market, weighted by market value, which represents the entire stock market or a particular segment of it.

Risk Aversion

The tendency of investors to avoid unnecessary risk, preferring safer investments over riskier ones for the same expected return.

Capital Asset Pricing

A model that describes the relationship between the expected return of an investment and the risk, or beta, relative to the market.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be mitigated through diversification.