All of the Following Are Advantages of the NPV/payback Approach

question 64

Multiple Choice

All of the following are advantages of the NPV/payback approach to risk analysis EXCEPT it ______.

• A) is easy and inexpensive to apply
• B) considers a project's liquidity
• C) explicitly considers the variability of a project's return
• D) is consistent with the notion that risk increases with futurity

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Definitions:

Sampling Distribution

A statistical distribution that represents the frequency of various outcomes in a set of samples drawn from a larger population.

Standard Deviation

A measurement of the dispersion or variation of a set of values, indicating how much the values deviate from the mean of the set.

Sampling Distribution

The pattern of likelihood for a particular statistic that originates from a random sample.

Standard Deviation

An indicator of the degree of spread or variability among a collection of figures, showing how far the values diverge from the average.