A Firm Is Evaluating the Relative Riskiness of Two Capital $\text { Net Present Value }$

question 59

Multiple Choice

A firm is evaluating the relative riskiness of two capital budgeting projects. The following table summarizes the net present values and associated probabilities for various outcomes for the two projects.
$\text { Net Present Value }$

$\begin{array}{rrr}\text { Probability }&\text { Project A }&\text { Project B }\\\hline 0.25 & -\$ 5,000 & 0 \\0.50 & 4,000 & \$ 2,000 \\0.25 & 10,000 & 8,000\end{array}$


-The coefficient of variations for projects A and B are

• A) 0.6 and 1, respectively.
• B) 0.8 and 2, respectively.
• C) 1.2 and 1.5, respectively.
• D) 1.6 and 1, respectively.

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Definitions:

Fiduciary Duty

An obligation to act in the best interest of another party, typically in a relationship where trust and confidence are essential.

Duty Of Care

An obligation to take steps to avoid foreseeable harm; an essential element for establishing liability in the tort of negligence.

Breach Of Fiduciary Duty

A legal violation that occurs when a trusted individual or entity fails to act in the best interests of those they owe a duty to.

Director

An individual appointed to the board of an organization, responsible for guiding its policy and direction.