Question: Assume that the Treasury bill rate is 6 percent and the expected return on the market portfolio is 14 percent. Your firm is considering the following investment projects.

In a top-level meeting of the firm's capital budgeting department, a financial analyst named Quart Low states that "the firm should undertake only those projects having an actual expected return (i.e., predicted internal rate of return) that exceeds the expected market portfolio rate of return of 14 percent. Therefore, the firm should accept project C and reject projects A and B."

The Chief Executive Officer then turns to you and asks whether you agree or disagree with Mr. Low. What is your response? Explain your reasoning. If you disagree, recommend a better investment strategy and explain.