Which of the Following Is an Example of the Free-Rider

question 11

Multiple Choice

Which of the following is an example of the free-rider problem?

• A)a political action committee contributing to candidates from both major political parties.
• B)an elected official relying on information from lobbyists
• C)an environmentalist deciding not to join an environmental group but appreciating the group's environmental stewardship
• D)an environmental group disagreeing on what policy goals to pursue

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Definitions:

Net Present Value Method

A method used in capital budgeting to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.

Annual Return

The annual return is the percentage change in an investment's value over a year, accounting for dividends, interest, and capital gains.

Present Value Factors

Multipliers used to determine the present value of a future sum of money or stream of cash flows given a specific discount rate.

Hurdle Rate

The minimum return rate on an investment required by an investor or manager, often used in capital budgeting.