If Firms Use the Company Cost of Capital for Evaluating

question 33

Multiple Choice

If firms use the company cost of capital for evaluating all of their projects, which of the following is likely?
I. Accepting poor low risk projects.
II. Rejecting good high risk projects.
III. Correctly accept projects with average risk.

• A) I only
• B) II only
• C) III only
• D) I,II and III

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Definitions:

Stereotypes

Oversimplified and generalized beliefs about a particular group of people, often leading to prejudgments and misconceptions.

Prejudices

Preconceived opinions or judgments about individuals or groups without sufficient knowledge or experience.

Age Bias

The unfair treatment or discrimination of individuals based on their age, typically in employment contexts.

Older Person

An individual who is significantly advanced in age, often considered to be past the middle age stage.