In assessing the risk of an individual project, the expected correlation of the new project's returns with those of the prevailing business should be considered.

Question

Quizplus · Accepted Answer

The expected correlation of the new project's returns with those of the prevailing business should be considered when assessing the risk of an individual project. This is because if the project's returns are highly correlated with the prevailing business, then any negative events affecting the prevailing business could also adversely affect the project.

In Assessing the Risk of an Individual Project, the Expected