Which of the Following Statements Is False

question 23

Multiple Choice

Which of the following statements is false?

• A) The IRR investment rule will identify the correct decision in many, but not all, situations.
• B) By setting the NPV equal to zero and solving for r, we find the IRR.
• C) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
• D) The simplest investment rule is the NPV investment rule.

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Definitions:

Securities

Financial instruments representing an ownership position, debt, or rights to ownership, traded in financial markets, such as stocks, bonds, and options.

Security Interests

A legal claim or lien on collateral that secures the performance of an obligation, typically seen in financing transactions.

Enforceable Oral Contracts

Verbal agreements that are recognized by law as binding, provided they meet certain criteria and are not for purposes requiring written contracts under the statute of frauds.

Substitute

An alternative or replacement for something else, often found or used when the original is unavailable or unsuitable.