In Cash Flow Models, We Are Typically Interested in Investigating

question 87

Multiple Choice

In cash flow models, we are typically interested in investigating:

• A) the value at risk (VAR)
• B) the net present value (NPV)
• C) the amount of loans required to maintain a minimum cash balance
• D) the interest on loans taken out by a firm
• E) none of these choices

---

Definitions:

Constant Returns to Scale

A situation in which increasing the amount of inputs results in a proportional increase in outputs.

Diseconomies of Scale

A situation in which production costs increase as a firm’s output increases, leading to decreased efficiency.

Decreasing Returns to Scale

Decreasing Returns to Scale occurs when a firm increases all inputs by a certain proportion, but the output increases by a smaller proportion, indicating reduced efficiency.

Average Costs

The total cost of production divided by the number of units produced, often used to assess efficiency and profitability.