The overall variability of a firm's returns depends on the expected return of each individual project, the percentage of funds invested in each individual project, and the correlation coefficient of returns between the investments.

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The variability of a firm's returns can be impacted by many factors, including the expected return of each project, the percentage of funds invested in each project, and the correlation coefficient of returns between the investments. All of these factors can impact the overall variability of returns, making it difficult to predict or manage risk without a careful analysis of each investment opportunity. By carefully considering these factors, firms can better manage their risk exposure and maximize their overall returns over time.

The Overall Variability of a Firm's Returns Depends on the Expected