Which of the Following Statements Is Correct

question 56

Multiple Choice

Which of the following statements is correct?

• A) A relatively risky future cash outflow should be evaluated using a relatively low discount rate.
• B) If a firm's managers want to maximise the value of the share, they should concentrate exclusively on projects' market, or beta, risk.
• C) If a firm evaluates all projects using the same required rate of return to determine NPVs, then the riskiness of the firm as measured by its beta will probably decline over time.
• D) If a firm has a beta which is less than 1.0, say 0.9, this would suggest that its assets' returns are negatively correlated with the returns of most other firms' assets.
• E) The above statements are all false.

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Definitions:

Inclusive Unionism

The policy, pursued by industrial unions, in which a union attempts to include every worker in a given industry so as to be able to restrict the entire industry’s labor supply and thereby raise wages. Compare with exclusive unionism.

Industrial Unions

Labor unions that organize workers across a wide range of occupations within a single industry.

Monopsonist

A monopsonist is a market condition where there is only one buyer facing many sellers, allowing the buyer to exert significant control over prices.

Monopsonistic Employer

An employer who has significant control over the labor market and is the only or dominant buyer of labor, allowing them to influence wages and employment conditions.