Investments That Are Mistakenly Made and Generate Losses

question 77

Multiple Choice

Investments that are mistakenly made and generate losses

• A) will occur when future revenues are known with certainty.
• B) indicate that the capital market is incapable of generating wealth.
• C) are normal costs of developing new projects and technologies in a world of uncertainty.
• D) will not occur when capital markets are operating efficiently.

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Definitions:

Fixed Cost

Costs that remain constant in total regardless of changes in the level of production or sales activity.

Per Unit

A term used to denote the cost or price of a single item or measure of a service or product.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid for a specific business.

Mixed Costs

Expenses that have both fixed and variable components, changing with the level of production or sales activity but not in direct proportion.