Taussig Technologies Is Considering Two Potential Projects,X and Y Which of the Following Statements Is Correct?$350,000$150,000$150,000$350,000Correlation of the Project

question 61

Multiple Choice

Taussig 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 numbers: $\begin{array}{ll}& \underline{\text { Project } \mathrm{X}}& \underline{\text { Project } \mathrm{Y}}\\\text { Expected NPV } & \$ 350.000 & \$ 3500,000 \\\text { Standard deviation ( } \left.\mathrm{C}_{\mathrm{NPV}}\right) & \$ 100,000 & \$ 150,000 \\\text { Project beta (versus market) } & 1.4 & 0.8\\ &&\text { Cash flows } \\ \text { Correlati on of the project cash flows } & \text { Cash flows are not correlated } & \text { are highlycorrelated with} &\\ \text { with cash flows from currently } & \text { with the cash flows from } & \text { the cash flows from } &\\ \text { existing projects. } & \text { existing projects. } & \text { existing projects. } &\\\end{array}$ Which of the following statements is correct?$350,000$150,000$150,000$350,000Correlation of the project cash flows with cash flows from currently existing projects.

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

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Definitions:

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, showing the portion of a company's profit allocated to each share of stock.

Stock Dividends

A form of dividend payment made by a corporation to its shareholders in additional shares rather than cash, affecting the company's stock price and equity structure.

Stock Exchange Requirements

Stock exchange requirements refer to the set of rules and standards that companies must meet and maintain to have their shares listed and traded on a particular stock exchange.