What is usually a limitation of estimating beta for new projects?

Estimating beta for new projects poses unique challenges primarily because data on the new projects' returns, including return on assets (ROAs), is often unavailable. Beta measures a project's or an investment's volatility relative to the market; however, for new projects, historical performance data is typically lacking since they have not yet been launched or have only just started generating returns.

Without sufficient historical returns or comparable data, analysts cannot accurately gauge the risk associated with the new project, making it difficult to compute a reliable beta value. Existing databases often provide insights into established companies or projects with significant historical data, but for a new venture, the absence of robust historical metrics translates directly into challenges in risk assessment.

While the other options touch on various aspects of financial analysis, they do not specifically address the critical issue of data availability and its direct impact on estimating beta for a new project as effectively as the correct choice does.