Standard deviation of pay off cash flows

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Reference no: EM131051030

You have an opportunity to invest $100 in a venture that will pay off in one year. The expected payoff is $500 and the standard deviation of pay off cash flows is $200. The risk-free rate is 4% per year, the required return on the market is 10%, the standard deviation of market returns is 15%, and the correlation between venture cash flows and the market is 0.2. based on the risk- adjusted- discount-rate, the CAPM-based required return is 20%. Is this true, false or uncertain? Explain.

Reference no: EM131051030

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