The Net Present Value of an Investment Is ________

question 1

Multiple Choice

The net present value of an investment is ________.

• A)the present value of all benefits (cash inflows)
• B)the present value of all benefits (cash inflows)minus the present value of all costs (cash outflows)of the project
• C)the present value of all costs (cash outflows)of the project
• D)the present value of all costs (cash outflow)minus the present value of all benefits (cash inflow)of the project

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Definitions:

Adjusted Beta

A beta value modified to account for a stock's historical volatility and tendency to revert to the market mean.

Well-Diversified Portfolio

An investment portfolio that spreads risk across various asset classes, industries, or geographical regions to reduce the impact of any single investment's poor performance.

Single Index Model

A simplified model to estimate security returns that relates these returns to a single market index, accounting for market risk.

Portfolio's Sigma

Portfolio's Sigma, often synonymous with standard deviation, quantifies the overall risk or volatility of a portfolio, indicating how its returns can vary from the expected return.