If a Market Becomes Deregulated and Is Forced to Change

question 12

Multiple Choice

If a market becomes deregulated and is forced to change from monopoly to competition,the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:

• A)monopoly assets.
• B)market assets.
• C)non-returnable assets.
• D)stranded assets.
• E)sunk assets.

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Definitions:

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Initial Investment

Initial investment refers to the amount of money initially laid out for an investment project or venture.

Profitability Index

The present value of a project’s cash inflows divided by the investment required.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.