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Author Question: Currently, Clemson Products has a beta of 1.2, and its sales and profits are positively correlated ... (Read 102 times)

camac77

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Currently, Clemson Products has a beta of 1.2, and its sales and profits are positively correlated with the overall economy. The company estimates that a proposed new project would have a higher standard deviation and coefficient of variation than one of the company’s average projects. Also, the new project’s sales would be countercyclical in the sense that they would be high when the overall economy is down and low when the overall economy is strong. On the basis of this information, which of the following statements is correct?

The proposed new project would increase the firm’s market risk.


The proposed new project would increase the firm’s corporate risk.


The proposed new project would have more stand-alone risk than the firm’s typical project.


The proposed new project would have less stand-alone risk than the firm’s typical project.



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Marked as best answer by camac77 on Aug 7, 2023

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camac77

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review


parshano

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Reply 3 on: Yesterday
Excellent

 

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