On a Particular Day, a Mining Company Reveals That, Due

question 10

Multiple Choice

On a particular day, a mining company reveals that, due to new extraction technology, the extractable yield from several of its mines has risen by 15%. Which of the following is the LEAST likely consequence of such an announcement?

• A)Investors would increase their forecast of future cash flows in that firm.
• B)The share price would rise due to the pressure to buy.
• C)Investors would revise their estimates of the net present value (NPV)of the firm.
• D)Investors would determine that the estimates of the firm's value on the date prior to the announcement were too high.

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Definitions:

Caffeine

A stimulant found in coffee, tea, and various foods and drinks that affects the central nervous system, increasing alertness.

Widely Used Drug

A substance that is commonly consumed or applied for its physiological and psychological effects.

Physical Dependence

A physiological state of adaptation to a substance, manifested by the development of withdrawal symptoms when the substance is reduced or stopped.

Caffeine

A stimulant of the central nervous system present in coffee, tea, and various foods and drinks, known to enhance alertness and reduce fatigue.