Capital Rationing

question 71

Multiple Choice

Capital rationing

• A) is a way of preserving the assets of the firm over the long term.
• B) is a less than optimal way to arrive at capital budgeting decisions.
• C) assures stockholder wealth maximization.
• D) assures maximum potential profitability.

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Definitions:

Fallacy of Division

A logical fallacy that arises when one assumes that something true of a whole must also be true of its parts.

False Conclusion

A statement or resolution that does not logically follow from the given premises or evidence.

Premises

Statements or propositions that are taken as true and used as the basis for an argument leading to a conclusion.

Transitivity Relationship

A principle in mathematics and logic where if relation holds between a and b, and between b and c, it also holds between a and c.