The Value of a Firm

question 77

Multiple Choice

The value of a firm

• A)increases when a new project with a negative net present value is accepted.
• B)equals the sum of the individual values of the firm's projects and divisions.
• C)is unaffected by the value of any one individual project.
• D)increases anytime a project with a zero net present value is accepted.
• E)is equal to the sum of all of the future cash flows derived from the firm's projects.

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Definitions:

Decreases

To become smaller or less in size, amount, intensity, or degree.

Portfolio Returns

The gain or loss on an investment portfolio, measured over a specific period of time.

Uncorrelated

Describes a situation where two or more variables do not have a linear relationship, meaning the change in one variable does not predict the change in another.

Standard Deviation

A metric that reflects the degree of spread or divergence in a group of values, revealing how far the values stray from the central value.