Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following data: Project X Project Y Expected NPV $350,000 $350,000 Standard deviation (ONPV) $100,000 $150,000 Project beta (vs. market) 1.4 0.8 Correlation of the project Cash flows are not cash flows with cash flows correlated with the cash correlated with the cash from currently existing projects. Which of the following statements is CORRECT? Cash flows are highly flows from existing projects. flows from existing projects. O a. Project X has more corporate.for within-firm) risk than Project Y. O b. Project X has more stand.alone risk than Project Y. O c Project X has the same market risk as Project Y since its cash flows are not correlated with the cash flows of existing projects. O d. Project X has more market risk than Project Y. e. Project X has the same level of corporate risk as Project Y.

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.