Which Method of Capital Budgeting Is Best Used for Longer

question 38

Multiple Choice

Which method of capital budgeting is best used for longer term capital investments?

• A)Net Present Value
• B)Internal Rate of Return
• C)None of these methods
• D)Both A & B

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Definitions:

Working Capital Accruals

The portion of earnings not realized in cash, representing changes in working capital that affect a company's cash flow.

Turnover

The ratio of the trading activity of a portfolio to the assets of the portfolio.

Liquidity Betas

A measure of how sensitive an asset's price is to changes in market liquidity, often used in financial modeling to assess the impact of liquidity risk.

Priced Factor

An element affecting the pricing of securities that is reflected in market prices due to its influence on asset returns.