Which of the Following Statements Is Correct

question 102

Multiple Choice

Which of the following statements is correct?

• A) A relatively risky future cash outflow should be evaluated using a relatively low discount rate.
• B) If a firm's managers want to maximize the value of the stock,they should concentrate exclusively on projects' market,or beta,risk.
• C) If a firm evaluates all projects using the same required rate of return to determine NPVs,then the riskiness of the firm as measured by its beta will probably decline over time.
• D) If a firm has a beta which is less than 1.0,say 0.9,this would suggest that its assets' returns are negatively correlated with the returns of most other firms' assets.
• E) The above statements are all false.

---

Definitions:

Trial Balance

An accounting report that lists the balances of all ledger accounts to ensure that debits equal credits, used for internal checks.

Owner's Drawings

Owner's disbursements from a business in either a sole proprietorship or partnership for personal expenditures.

Salaries and Wages Expense

The total amount spent by a business on its employees' salaries and wages during a specific period.

Equipment

Tangible assets used in operations, such as machinery and office hardware, which are subject to depreciation over their useful lives.