The Standard Deviations (In Thousands of Dollars) for Building a Small

question 23

Multiple Choice

The standard deviations (in thousands of dollars) for building a small and large complex are 535 and 976, respectively. Based on the resulting coefficients of variation (CV) , which of the following statements would be true?

• A) The CV of building a large complex is less than that of building a small complex.
• B) The CV of building a small complex is less than that of building a large complex.
• C) The risk averse action would be to build a large complex.
• D) Since the CV of building a large complex is less than that of building a small complex, the risk averse action would be to build a large complex.
• E) The CV of building a small complex is about the same as that of building a large complex.

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Definitions:

Project Analysis

The process of evaluating the financial and operational implications of a proposed project or investment to determine its viability and expected returns.

Net Present Value

An economic indicator for assessing an investment's gainfulness, which involves the deduction of the present value of cash expenditures from the present value of cash receipts over a certain period.

Minimally Required

The least amount that is necessary or allowed, especially in the context of financial or regulatory requirements.

Cash Inflows

Money or the amount of money received by a business from its operational, financing, and investing activities.