Which of the Following Is NOT an Important Consideration in Measuring

question 8

Multiple Choice

Which of the following is NOT an important consideration in measuring risk for a capital budgeting project for a well-diversified firm?

• A) systematic risk
• B) contribution to firm risk
• C) total project risk
• D) None of the above-all may be important in measuring project risk.

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Definitions:

Translation Adjustment

An adjustment in the financial statements to account for gains or losses that arise from converting foreign currencies into the reporting currency.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, used in generating and expending cash.

Exchange Rates

The worth of one currency when converted to another, establishing how much one currency can be exchanged for another.

Operating Expense

Recurring expenses incurred during normal business operations, such as rent, utilities, and salaries.