Information Asymmetry Is

question 11

Multiple Choice

Information Asymmetry is:

• A) false information spread by competitors.
• B) when two pieces of information counteract each other.
• C) when some know more than others.
• D) when information is not reflected properly in the market.
• E) incomplete information.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to analyze the profitability of an investment.

After-tax Salvage Value

The estimated value of an asset at the end of its useful life, after deducting any taxes owed from its disposal.

Required Rate of Return

The minimum expected return an investor demands for the risk associated with holding an investment.

Operating Cash Flow

The cash generated from the normal operating activities of a business over a specific period.