Which One of the Following Is an Indicator That an Investment

question 101

Multiple Choice

Which one of the following is an indicator that an investment is acceptable?

• A)Modified internal rate of return equal to zero
• B)Profitability index of zero
• C)Internal rate of return that exceeds the required return
• D)Payback period that exceeds the required period
• E)Negative average accounting return

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Definitions:

Subjective Probabilities

Individual assessments or beliefs about how likely events are to occur, based on personal judgment rather than objective data.

Objective Probabilities

Quantifiable likelihood or chance of an event occurring, based on statistical and empirical evidence rather than subjective judgment.

Probabilities

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 1 indicates certainty.

Certainty

The state of being sure or confident about something, often referencing situations in decision-making where outcomes are known.