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An investor is considering an investment. After a great deal of careful research he determines that the forecasted return on the investment is 15% and estimates the beta to be 2.0. The risk-free rate of interest is 3%, and the return on the market is 13%. Should the project be undertaken? A. Yes, the forecasted return is less than the expected return of 18%. B. No, the forecasted return is less than the expected return of 23%. C. Yes, the forecasted return is more than the expected return of 13%. |