Suppose that apex health services has four different

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Suppose that Apex Health Services has four different projects. These projects are listed below, along with the amount of capital invested and estimated corporate and market betas:


Project


Amount Invested

Corporate Beta

Market Beta

Walk - In Clinic

500000

1.5

1.1

MRI Facility


2000000

1.2

1.5

Clinical Laboratory

1500000

0.9

0.8

X-ray Laboratory

1000000

0.5

1



$5000000

========


a. Why do the corporate and market betas differ for the same project?

b. What is the overall corporate beta of Apex Health Services? Is the calculated beta consistent with the corporate risk theory?

c. What is the overall market beta of Apex Health Services?

d. How does the riskiness of Apex's stock compare with the riskiness of an average stock?

e. Would stock investors require a rate of return on Apex that is greater than, less than, or the same as the return on an average stock?

Reference no: EM13380627

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