Question: The ABC Co is considering two projects A and B. Both projects have conventional cash flows. Project A has a beta of 0.9 and it

The ABC Co is considering two projects A and B. Both projects have conventional cash flows. Project A has a beta of 0.9 and it has the expected return of 12.1%. Project B has beta of 1.1 and it has expected return of 10.8%. Required return of the market is 11.5%. The risk-free rate is positive and less then required market return. Are these two projects correctly priced relative to each other?

		Yes
		No
		Cannot be determined without knowing the risk free rate

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