Divisional Costs of Capital Are More Appropriate When Evaluating a Project

question 90

Multiple Choice

Divisional costs of capital are more appropriate when evaluating a project for a line of business when the types of business in a firm are

• A) different.
• B) similar.
• C) mature businesses.
• D) new businesses.

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Definitions:

Sales Load

A fee charged for the purchase or sale of shares in a mutual fund, often used to compensate brokers.

12b-1 Charge

A 12b-1 Charge is a fee assessed by mutual funds to cover marketing, distribution, and service expenses, included as part of the fund's operating expenses.

Unit Investment Trust

An investment company that offers a fixed portfolio of stocks, bonds, or other securities, which is typically unmanaged, to investors for a specific period of time.

Fixed Portfolio

An investment strategy where the asset allocation is set for the long term and is not adjusted in response to market conditions.