Assume MACROSOFT Is Planning to Develop and Sell a New

question 26

Multiple Choice

Assume MACROSOFT is planning to develop and sell a new word processor.It estimates that R&D expenses will amount to $300,000 for this new software,and it will have to invest an additional $150,000 to advertise and distribute the new product.If MACROSOFT's managers are risk-neutral,they will undertake this project if the expected revenues from the sales of the new software are

• A)at least $150,000.
• B)at least $100,000.
• C)at least $300,000.
• D)at least $450,000.

Learn the significance of the market risk premium and how it affects investments.

Calculate and interpret portfolio beta as a measure of risk relative to the market.

Learn how world events and investor risk aversion impact the market risk premium.

Understand the role of the security market line (SML) in CAPM.

---

Definitions:

Mature Person

An individual who demonstrates emotional and psychological stability, responsible behavior, and the ability to make reasoned decisions based on experience.

Procedural Justice

The fairness and transparency of the processes that lead to outcomes or decisions, emphasizing the way decisions are made rather than the outcomes themselves.

Moral Philosophy

The branch of philosophy concerned with discussing what is morally right and wrong, and why human actions and intentions are evaluated as good or evil.