The Value of Any Asset-Real or Financial-Is Based on the _____

question 4

Multiple Choice

The value of any asset-real or financial-is based on the _____ and the _____. 

• A)weighted average cost of the investment; rate of return achieved by the firm
• B)cash flow expected to be generated by the asset; the rate of return required by investors
• C)marginal return an investor expects to earn from the investment; additional cash flow generated by the asset
• D)rate of return achieved by the investment firm; investors' weighted average cost of investing their money
• E)rate of return earned by the firm; cash flow expected to be generated by the asset

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Definitions:

Interest Tax Savings

The reduction in income tax that results from the deductibility of interest payments on certain types of loans, such as mortgages.

Discount Rate

The interest rate used to discount future cash flows of a project or investment to determine its present value.

Defensive Merger

A strategy where a company merges with or acquires another company to protect itself against potential competitors or hostile takeovers.

Hostile Takeover

An acquisition attempt by a company or individual against the target company's wishes.