Which of the Following Statements Is False

question 29

Multiple Choice

Which of the following statements is false?

• A) One way to understand why you would sometimes choose not to invest in a positive-NPV project is to think about the decision of when to invest as a choice between two mutually exclusive projects: (1) invest today or (2) wait.
• B) You invest today only when the NPV of investing today exceeds the value of the option of waiting, which from option pricing theory we know to be always positive.
• C) When you do not have the option to wait, it is optimal to invest in any positive-NPV project.
• D) When you have the option of deciding when to invest, it is usually optimal to invest only when the NPV is positive but close to zero.

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Definitions:

Allonge

Accompanying a negotiable instrument, a piece of paper that provides room for an endorsement if no room is available on the instrument itself.

Instrument

A legal document that formalizes an agreement or right, such as a contract, will, or financial instrument.

Endorsement

The act of signing one's name on the back of a check or other negotiable instrument to legally transfer its ownership.

Blank Endorsement

An endorsement on a financial instrument, like a check, where the signature of the endorser is written but no specific endorsee is named, making it payable to the bearer.