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:

Sulfuric Acid

A highly corrosive strong mineral acid with molecular formula H2SO4, widely used in industry and as a laboratory reagent.

Elimination Product

A molecule resulting from the removal of atoms or groups from a reactant, typically involving the loss of a small molecule like water or hydrogen halide.

Major Organic Product

The primary product of a chemical reaction involving organic compounds which is formed in the greatest yield.

Reaction

An operation where substances combine, resulting in the creation of one or more new entities with differing physical and chemical properties.