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If a firm applies its overall firm's beta to projects with varying levels of risk, the firm will tend to: Multiple Choice

a. reject the riskiest projects.
b. accept all low-risk projects.
c. become riskier over time.
d. accept only projects of equal risk to its current operations.
e. remain at its current level of overall risk.

Respuesta :

maranathaoye

Answer: b. Accept low risk projects.

Explanation:

Baraq

A company's beta is a measure of the volatility, or systematic risk, of a security, as it compares to the broader market. Hence, if overall beta is applied, such company tends to:

  • c. become riskier over time

The beta of a company

The beta of a company measures how the company's equity market value changes with changes in the overall market. Hence, If a firm applies its overall firm's beta to projects with varying levels of risk, the firm will tend become riskier over time.

Therefore, the effect of the application is to become riskier over time.

learn more about the beta of a company from here: https://brainly.com/question/14116384

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