One of the Strengths of Using a Hurdle Rate to Measure

question 53

True/False

One of the strengths of using a hurdle rate to measure the performance of divisions in a diversified firm is that if the corporation has a single hurdle rate, there is little ambiguity about the performance objectives of divisions.

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Definitions:

Indifference Curves

Graphical representations showing combinations of two goods that give a consumer equal levels of satisfaction, indicating preferences.

Pareto Optimal

A condition of resource allocation in which it is impossible to make any one individual better off without making someone else worse off, signifying an efficient distribution of resources.

Competitive Equilibrium Price

The market price where the quantity of goods supplied is equal to the quantity of goods demanded, effectively clearing the market.

Utility Function

A mathematical representation of how different quantities of goods or services are ranked according to their desirability for a consumer.