Which One of the Following Statements Is Correct

question 78

Multiple Choice

Which one of the following statements is correct?

• A)The subjective approach assesses the risks of each project and assigns an adjustment factor that is unique just for that project.
• B)Overall, a firm makes better decisions when it uses the subjective approach than when it uses its WACC as the discount rate for all projects.
• C)Firms will correctly accept or reject every project if they adopt the subjective approach.
• D)Mandatory projects should only be accepted if they produce a positive NPV when the firm's WACC is used as the discount rate.
• E)The pure play approach should only be used with low-risk projects.

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Definitions:

Persuasive Arguments Theory

A theory in social psychology that suggests the persuasiveness of a message depends on the quality and quantity of arguments presented and how these arguments are interpreted by the audience.

Informational Influence

The process of using others as a source of information about the world.

Deindividuation

A psychological state characterized by reduced self-awareness and diminished social identity, often leading to uninhibited and sometimes antisocial behavior.

Openness to New Experiences

A personality trait characterized by a willingness to try new things, explore unfamiliar places, and engage in different activities or ideas.