Returns on individual stock and the market portfolio

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Reference no: EM131566371

TRUE OR FALSE (If false briefly explain)

-A firm's cost of capital can be used in valuation of every new project they encounter, regardless of its risk.

-The security market line plots the historic relationship between returns on an individual stock and the market portfolio.

-Changing the discount rate is equivalent to adjusting expected cash flows as a method of accounting for risk

-The greater the DOL, the greater the protection against operating losses during economic downturns

-If a project permits a reduction in the level of working capital, this reduction is assumed to increase cash flows

Reference no: EM131566371

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