The project that is likely to have the higher asset beta, other things equal, is Project C, which is a first-class-only airline.
Asset beta measures the sensitivity of an asset's returns to the overall market returns. A higher asset beta indicates that the asset's returns are more volatile and sensitive to market movements.
In this case, Project C being a first-class-only airline suggests that it operates in a luxury segment of the airline industry. Luxury segments tend to be more sensitive to economic fluctuations and changes in consumer spending. As a result, the returns of Project C are likely to be more volatile and sensitive to market movements, leading to a higher asset beta compared to the other projects.
Which of these projects is likely to have the higher asset beta, other things equal? Select the project or projects.
Be able to justify your answer
Group of answer choices
The sales force for project A is paid a fixed annual salary.
Project B's Sales force is paid by commission only
Project C is a first-class-only airline.
Project D is a well -established line of breakfast cereals.