If the Calculated NPV Is Negative,then Which of the Following

question 181

Multiple Choice

If the calculated NPV is negative,then which of the following must be true? The discount rate used is

• A) Equal to the internal rate of return.
• B) Too high.
• C) Greater than the internal rate of return.
• D) Too low.
• E) Less than the internal rate of return.

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Definitions:

Fiduciary Duty

This is a legal obligation of one party to act in the best interest of another when entrusted with care of money, property, or confidential information.

Madoff's Ponzi Scheme

A massive fraudulent investment operation masterminded by Bernard Madoff, where returns to investors were paid from their own money or the money of new investors, rather than from profit earned.

Proper Name

A specific reference to a unique individual, place, or thing, typically starting with a capital letter and used to give identity.

Limited Partnership's Property

Assets owned by a limited partnership, which are used for the partnership's business and may be subject to claims by creditors, separate from the personal assets of the partners.