Which of the Following Statements Is False

question 22

Multiple Choice

Which of the following statements is false?

• A) When the investment cannot be delayed, the optimal rule is to invest whenever the profitability index is greater than zero.
• B) It is often better to wait too long (use a profitability index criterion that is too high) than to invest too soon (use a profitability index criterion that is too low).
• C) When the source of uncertainty that creates a motive to wait is interest rate uncertainty, the hurdle rate is relatively easy to calculate.
• D) When there is an option to delay, a good rule of thumb is to invest only when the profitability index is at least 1.

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Definitions:

Standard Deviations

The measure of the dispersion or spread of data points in a data set from its mean, reflecting how much variation there is from the average.

Data Set

A collection of related sets of information that is composed of separate elements but can be manipulated as a unit by a computer.

CAT Mnemonic

A memory aid used to recall specific information, but without more context, the exact application of "CAT" cannot be determined.

Accomplish Change

To accomplish change means to successfully bring about a difference in someone's behavior, thoughts, or circumstances through deliberate efforts or interventions.