Given the following: the risk-free rate is 8% and the market risk premium is 8.5%. Project II should
be accepted if the ﬁrm's beta is 1.2.

Name: Given the following: the risk-free rate is 8% and the market risk premium is 8.5%. Project II should be accepted if the ﬁrm's beta is 1.2.
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Quizplus · Accepted Answer

Project II should be accepted if the firm's beta is 1.2, which means it has a higher return than the risk-free rate plus the market risk premium, i.e., 8% + 1.2(8.5%) = 18.2%.

Given the Following: the Risk-Free Rate Is 8% and the Market