trimommalone5784 trimommalone5784
  • 19-08-2020
  • Business
contestada

What happens to most projects' value under the CAPM if there is a sudden increase to its market-beta

Respuesta :

ewomazinoade ewomazinoade
  • 21-08-2020

Answer:

Its value increases

Explanation:

Here are the options to this question :

its value decreases

Its value increases

Its value stays the same

According to the CAPM ,

expected return of an asset = risk free rate + (beta x risk premium)

If the beta increases, the expected return of the asset increases and the value of the asset increases

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