Question

What happens to most projects' value under the CAPM if there is a sudden increase to its market-beta

Answer 1

Its value increases

Step-by-step explanation:

Here are the options to this question :

its value decreases

Its value increases

Its value stays the same

According to the CAPM ,

expected return of an asset = risk free rate + (beta x risk premium)

If the beta increases, the expected return of the asset increases and the value of the asset increases