Which of the Following Statements Is Correct

question 37

Multiple Choice

Which of the following statements is correct?

• A)Capital budgeting projects with fairly risky cash flows should be evaluated using relatively high discount rates (required rates of return).
• B)If managers want to maximize the firm's stock value, they should not be concerned with risk when making capital budgeting decisions.
• C)If a firm evaluates all capital budgeting projects using its existing required rate of return, its overall risk, as measured by its beta coefficient, probably will decline over time.
• D)If a firm has a beta coefficient that is less than 1.0, its existing required rate of return will be negatively correlated with the returns on most of the capital budgeting projects it evaluates in the future.
• E)A firm should use a different approach to estimate the riskiness of mutually exclusive projects than it uses to estimate the riskiness of independent projects.

---

Definitions:

Foreign Entanglements

Involvements or commitments by a country in international affairs, particularly in conflicts or alliances, which can complicate diplomatic relationships or lead to military action.

Porfirio Díaz

was a Mexican general and politician who served as President of Mexico for seven terms, overseeing a period of significant economic modernization and foreign investment, known as the Porfiriato.

Civil War

A significant internal conflict fought in the United States from 1861 to 1865 between the Northern states (Union) and the Southern states that seceded to form the Confederate States of America, primarily over issues of slavery and state sovereignty.

Mexican People

denotes the citizens or natives of Mexico, a country in North America with a rich culture that blends indigenous and Spanish influences.