Which of the Following Statements Regarding Value Additivity Is FALSE

question 53

Multiple Choice

Which of the following statements regarding value additivity is FALSE?

• A)The value of a portfolio is equal to the sum of the values of its parts.
• B)The price or value of the entire firm is equal to the sum of the values of all projects and investments within the firm.
• C)To maximize the value of the entire firm,managers should make decisions that maximize NPV.
• D)Value additivity does not have important consequences for the value of the entire firm,only on portfolios of firms.

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Definitions:

Goods

Tangible items that are manufactured or produced for sale and use, often referring to items of merchandise or inventory.

Right of Return

The right of return is a policy that allows customers to return purchased goods within a specified period for a refund, exchange, or credit.

Sales Revenue

Income earned from the sale of goods or services before any expenses are deducted.