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A Problem with Estimating the Cost of Capital for a Project

Question 16

Multiple Choice

A problem with estimating the cost of capital for a project using the CAPM derived from market data is that:


A) the estimate for standard deviation is not obtainable.
B) a value for the risk-free rate of interest is not available.
C) it is not possible to estimate systematic risk from market data.
D) individual investment projects are not traded on a stock exchange.

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