All of the Following Are Characteristics of the Capital Investment

question 73

Multiple Choice

All of the following are characteristics of the capital investment decisions that are critical to long-run profitability EXCEPT:

• A) They affect earnings over a long period
• B) They are much less liquid than other assets
• C) They involve fixed assets
• D) They require large outlays of capital

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Definitions:

Transitivity

In decision theory, the principle that if a person prefers option A to option B and prefers option B to option C, then the person should prefer option A to option C.

Intersect

The point at which two or more lines or curves meet or cross each other.

Marginal Rate

Generally refers to the additional or incremental rate applied to an additional unit of some activity, such as the rate of tax applied to the next dollar of income.

Budget Constraint

Represents the limitations on the choices consumers can make, given their income and the prices of goods and services.