Suppose That a Company Has X Units of Resources and Is

question 19

Multiple Choice

Suppose that a company has X units of resources and is considering three investment/dividend policies,P₁,P₂ and P.The following graph shows market opportunity lines drawn through each of these points:
The line through P₁ shows that:

• A)if policy P₁ were adopted,the shareholders' wealth would decrease from W to W₁.
• B)if policy P₁ were adopted,the shareholders' wealth would increase from X to W₁.
• C)if policy P₁ were adopted,the shareholders' wealth would remain unchanged at W₁.
• D)none of the given options.

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