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:

Behavior Modification

The application of reinforcement or punishment techniques to change a person's behavior.

Components

The distinct parts or elements that make up a larger system or complex structure.

Self-Fulfilling Prophecy

A phenomenon where an individual's expectations or predictions inadvertently lead to behaviors that cause the expectation to come true.

Investment Analysts

Professionals who evaluate financial data, economic trends, and investment opportunities to provide recommendations.