Which Statement Is False with Respect to the Decision Rule

question 33

Multiple Choice

Which statement is false with respect to the decision rule: accept a project if and only if [Return at Time 2 / (1 + i) - Δ] > 0?

• A)The decision rule is completely consistent with Fisher's separation theorem.
• B)The decision rule is the same as the net present value rule.
• C)A company that always applies the decision rule to its investment decisions will be able to locate the optimal investment/dividend policy and will maximise the wealth of its shareholders.
• D)None of the given options.

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Definitions:

Standard Deviation

A measure of the dispersion or variability within a set of numerical data, indicating how spread out the numbers are from the average.

Interquartile Range

The difference between the 75th and 25th percentiles of a data set, representing the middle 50% of values.

Range

The difference between the highest and lowest values in a data set, giving a measure of the data’s dispersion.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values are from the mean.