If a firm's cost of capital is 15% and a large divisions cost of capital is 10%, then discounting the divisions cash flows at 15% would?
Determine where the project plots in relation to the security market line
Make the project look more attractive than it should be
Be correct from a theoretical perspective
Be incorrect and could cause the project to be erroneously rejected
If the market portfolio (S&P 500) is expected to return 15%, then a portfolio that is expected to return 12%?
Plots above the security market line
Plots to the right of the market on an SML graph
Is not diversified
Has a beta that is less than 1.0
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