Use the Information for the Question(s) Below

question 48

Multiple Choice

Use the information for the question(s) below.

-If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) Project B

• A) Project A
• B) will WiseGuy Inc. prefer?
• C) Project A and Project B have the same ranking.
• D) Cannot calculate a payback period without a discount rate.

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Definitions:

Survivorship Bias

A bias that occurs when analyzing performance or characteristics by overlooking failures or non-survivors, leading to overly optimistic or skewed outcomes.

Measurement Error

The difference between a measured variable's observed value and its true value, often due to inaccuracies in data collection or processing.

Multifactor Model

An investment model that seeks to describe the expected returns on a security based on various risk factors, providing a more comprehensive view than models based on a single factor.

Market Indexes

Benchmarks that track the performance of a specific basket of stocks, representing a particular sector or the market as a whole.