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.