Table 12.3 Tangshan Mining Company Is Considering Investment in One of Two

question 56

Multiple Choice

Table 12.3
Tangshan Mining Company is considering investment in one of two mutually exclusive projects M and N which are described below. Tangshan Mining's overall cost of capital is 15 percent, the market return is 15 percent and the risk-free rate is 5 percent. Tangshan estimates that the beta for project M is 1.20 and the beta for project N is 1.40.
-Which of the following statements is most correct?

• A) Because a business firm can be viewed as a portfolio of assets, it is important that the firm maintain a diversified portfolio of investments in order to reduce firm diversifiable risk.
• B) Firm's are rewarded for choosing and implementing from among a diversifiable collection of projects through higher stock values.
• C) Firms generally are not rewarded for choosing and implementing from among a diversifiable collection of projects through higher stock prices.
• D) Two of the above are true.

Critique the assertions made in "The Bell Curve" regarding IQ and cognitive ability.

Identify individual differences in memory and computational abilities.

Understand gender differences and societal influences on cognitive abilities and styles.

Identify and understand various forms of discrimination, including racism, sexism, ageism, and ableism.

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Definitions:

Goodwill

An intangible asset reflecting the excess value of a business above its net tangible assets, often arising from acquisitions.

Consolidated Balance Sheet

A financial statement showing the combined assets, liabilities, and equity of a parent company and its subsidiaries.

Acquisition Method

An accounting technique used to consolidate the financial statements of a parent company and its subsidiaries.

Monetary Assets

Assets that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.