Which of the Following Statements Regarding Value Additivity Is FALSE

question 53

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 on portfolios of firms.

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Definitions:

Joint And Several

A legal term referring to the liability shared by two or more parties, where each party is individually responsible for the entire obligation, as well as collectively with the others.

Corporate Veil

A legal concept that separates the personal liability of shareholders and officers from that of the corporation itself.

Artificial Legal Person

A non-human entity that is given legal rights and responsibilities, such as a corporation or a government body.

Bylaws

The internal rules of management adopted by a corporation at its first organizational meeting.