Which of the Following Statements Is FALSE

question 12

Multiple Choice

Which of the following statements is FALSE?

• A) The profitability index measures the value created in terms of NPV per unit of resource consumed.
• B) The profitability index is the ratio of value created to resources consumed.
• C) The profitability index can can be easily adapted for determining the correct investment decisions when multiple resource constraints exist.
• D) The profitability index measures the "bang for your buck."

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Definitions:

Market Yield

The current annual income return of an investment divided by the present market price.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments and are sold at a discount from their face value.

Market Price

The current price at which an asset or service can be bought or sold on the open market.

Coupon Bond

A bond that pays the holder a fixed interest payment (coupon) at regular intervals until the maturity date, when the principal amount is repaid.