Under Which of the Following Are Decisions Are Made by Looking

question 13

Multiple Choice

Under which of the following are decisions are made by looking at the investment's risk and return characteristics on a stand-alone basis?

• A) Individual asset basis.
• B) Within activity basis.
• C) Fully integrated basis.
• D) Both a and b.
• E) Both b and c.

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Definitions:

Debt Rating

An assessment of the creditworthiness of a debtor, usually in the form of a code or letter grade, provided by credit rating agencies.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and satisfy its creditors and investors.

Market Value

The current value at which the market facilitates the sale or purchase of a service or asset.

WACC

Weighted Average Cost of Capital; a calculation used to assess the cost of a company's financing by averaging the costs of its equity and debt, weighted by their respective proportions in the company's capital structure.