Which of the Following Statements Regarding Value Additivity Is False

question 42

Multiple Choice

Which of the following statements regarding value additivity is false?

• A) The value of a portfolio is equal to the sum of the values of its parts.
• B) The price or value of the entire firm is equal to the sum of the values of all projects and investments within the firm.
• C) To maximize the value of the entire firm, managers should make decisions that maximize NPV.
• D) Value additivity does not have important consequences for the value of the entire firm, only for portfolios of firms.

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Definitions:

Quantity Supplied

The measure of goods or services available from producers for sale at a particular price.

Equilibrium Price

A market state where the demand for a product matches its supply, resulting in a stable price point.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a certain price over a defined period.

Equilibrium Price

The rate at which supply and demand for a specific good or service are equal, creating a stable market condition.