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.

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Definitions:

Confidential Information

Sensitive data that is meant to be kept secret from unauthorized parties, including trade secrets, business strategies, and personal information.

Gratuitous Agents

Those who act on behalf of another without receiving any compensation for their services.

Subagent

A representative or agent appointed by another agent who also has the authority and responsibility to perform specific tasks on behalf of the original agent's principal.

In-house Counsel

A lawyer or team of lawyers employed directly by a corporation or organization to provide legal advice and services.