The Following Question Are Based on the Following Diagram of the Average

question 74

Multiple Choice

The following question are based on the following diagram of the average cost curves for three different-sized plants:

-If the firm is still in the planning stages of plant construction,it should choose the

• A) small plant if it expects an output rate below 3,000 units per day.
• B) large plant regardless of output because it has the lowest per unit costs.
• C) medium-sized plant because it would give the firm the most flexibility, allowing it to produce any output between 0 and 3,000.
• D) small plant if it expects an output rate below 1,000 per day.
• E) medium-sized plant because it has the advantage of increasing economies of scale.

Identify and calculate the reward-to-variability ratio and its significance in investment decisions.

Understand the role of risk aversion in portfolio selection and asset allocation.

Familiarize with key portfolio management concepts such as the efficient frontier, capital market line, and optimal risky portfolio.

Recognize the impact of firm-specific events on stock investments and the importance of diversification.

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Definitions:

Patents

Legal rights granted to inventors to exclusively produce, use, and sell their invention for a certain period of time, providing protection against unauthorized use.

R&D Expenditure

Funding allocated towards research and development activities to innovate or improve products or services.

Expected Rate of Return

A measure of the anticipated profit or loss on an investment, expressed as a percentage of the investment's initial cost.

Fast-Second Strategies

Business tactics employed by companies to quickly follow innovators, capitalizing on the market research and initial developments made by the first movers without bearing the same risks or costs.