If Financial Markets Were Not Efficient,it Would Be Easier for Firms

question 40

Multiple Choice

If financial markets were not efficient,it would be easier for firms to:

• A) finance investments in a zero-NPV transaction.
• B) finance investments in a positive NPV transaction.
• C) totally avoid the need for external financing.
• D) finance investments in a negative NPV transaction.

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Definitions:

Stakeholder Group

A collection of individuals or organizations that have an interest in or are affected by the outcomes of a project or company’s operations.

Primary

Referring to something that is of first importance or serves as the original source.

Strategic

Pertaining to the identification of long-term or overall aims and interests and the means of achieving them.

Primary Stakeholder

An individual or group that has a direct investment, interest, or involvement in the outcomes of an organization.