1. Net present value may be interpreted as the amount by which the market value of the firm will change if the project is accepted.
True / False
2. In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.
True / False
3. You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 0.5, and the total portfolio is twice as risky as the market. What is the beta coefficient of the other stock in your portfolio?
1.5
4.1
5.5
6.7