Which of the Following Best Describes the Valuation Principle

question 18

Multiple Choice

Which of the following best describes the valuation principle?

• A) It is not possible to compare costs and benefits that occur at different points in time, in different currencies, or with different risks.
• B) The value of a commodity or an asset to a firm or its investors is determined by its competitive market price. When the value of the benefits exceeds the value of the costs in terms of market prices, the decision will increase the market value of the firm.
• C) The rate at which we can exchange money today for money in the future by borrowing or investing is the current market interest rate and is same across all banks.
• D) If equivalent goods or securities trade simultaneously in different markets across the world, they will trade for the same price.

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Definitions:

Cigarette Smoking

The act of inhaling and exhaling the smoke of burned tobacco contained in cigarettes, a major health hazard leading to numerous diseases.

Major Source

The primary origin or point of emission for a substance, energy, or material in an environmental context.

Odourless

Refers to substances that do not emit a detectable smell.

Poisonous Gas

Gaseous substances that are harmful or fatal to living organisms when inhaled or absorbed.