A project's cash flows have a beta of 1.2, a standard deviation of $340, and a coefficient of variation of 0.40. What is the expected cash flow?
A) $850
B) $167
C) $2,400
D) $500

Question

Quizplus · Accepted Answer

The coefficient of variation is the ratio of the standard deviation to the expected value. Therefore, the expected value is the standard deviation divided by the coefficient of variation. In this case, the expected value is $340 / 0.40 = $850.

A Project's Cash Flows Have a Beta of 1