Which of the Following Statements Is True

question 16

Multiple Choice

Which of the following statements is true?

• A)A firm that uses a single cost of capital as a required rate of return for all its projects will lose out because it may reject profitable projects that have a risk level that is greater than
• The average-risk project of the firm.
• B)It is better for a firm to use a single cost of capital as a required rate of return for all projects because it will then maintain a constant risk level for the firm.
• C)A firm that uses a single cost of capital as a required rate of return for all its projects may end up accepting unprofitable projects that have a risk level that is below average for the
• Firm.
• D)A firm that uses a single cost of capital as a required rate of return for all its projects may end up rejecting profitable projects that have a risk level that is below average for the firm.

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Definitions:

Bundle

A combination of various goods and services that a consumer can choose to consume, given their income and preferences.

Entertainment

Activities, performances, or media produced to provide enjoyment and amusement to individuals or groups.

Subsidy

is financial assistance provided by the government to individuals or groups to support an economic activity deemed beneficial.

Revealed Preferred

A concept in consumer choice theory that preferences can be determined by observing consumer choices under different constraints.