Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A) A relatively risky future cash outflow should be evaluated using a relatively high discount rate.
• B) If a firm's managers want to maximize the value of the stock, they should concentrate exclusively on the 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 that 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) Project risk estimation is independent of the beta coefficient.

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Definitions:

Dependent Population

The segment of the population that relies on others for support, typically including children, the elderly, and those unable to work.

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, heralding significant changes in technology, economy, and society.

Economic Growth

The rise in the real market value of goods and services generated by an economy over a period.

Living Standards

The degree of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.