In Applying Risk-Adjusted Discount Rates to Project Selection, Projects Falling

question 10

True/False

In applying risk-adjusted discount rates to project selection, projects falling above the SML would have a positive NPV and those falling below the SML would have a negative NPV.

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Definitions:

Law Of Supply

An increase in the price of a product will increase the quantity of it supplied; and conversely for a decrease in price.

Quantity Supplied

The quantity of a product that suppliers are ready and capable of offering for sale at a certain price during a defined timeframe.

Equilibrium Quantity

The quantity of goods or services supplied that is exactly equal to the quantity demanded at the market equilibrium price.

Supply Decrease

A reduction in the quantity of a good or service that producers are willing and able to offer at any given price.