Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A)The Capital Asset Pricing Model is the most important method for estimating the cost of capital that is used in practice.
• B)Because the risk that determines expected returns is unsystematic risk,which is measured by beta,the cost of capital for an investment is the expected return available on securities with the same beta.
• C)A common assumption is that a project has the same risk as the firm.
• D)To determine a project's cost of capital we need to estimate its beta.

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Definitions:

Hull's Theory

A drive reduction theory of learning that emphasizes the role of reinforcement and the reduction of drives in the learning process, developed by Clark L. Hull.

B.F. Skinner

An American psychologist and behaviorist known for his work in developing the theory of operant conditioning, focusing on the impact of external stimuli on behavior.

Dynamic Conflict

A situation of opposition or struggle between forces that are active and capable of causing change.

Behavior Therapy

A type of psychotherapy that focuses on modifying negative behaviors and thought patterns.