Which One of the Following Statements Is NOT True

question 53

Multiple Choice

Which one of the following statements is NOT true?

• A) Accepting a positive-NPV project increases shareholder wealth.
• B) Accepting a negative-NPV project has no impact on shareholder wealth.
• C) Accepting a negative-NPV project decreases shareholder wealth.
• D) Managers are indifferent about accepting or rejecting a zero NPV project.

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Definitions:

Overconfidence

A cognitive bias where an individual's subjective confidence in their judgments is reliably higher than their objective accuracy, leading to potential errors in decision making.

Hindsight Bias

The predisposition to think, once an event has taken place, that one could have predicted or anticipated its outcome.

Intuition

An effortless, immediate, automatic feeling or thought, as contrasted with explicit, conscious reasoning.

Overconfidence

Overconfidence refers to the phenomenon where an individual's subjective confidence in their judgements is reliably greater than their objective accuracy, especially when confidence is relatively high.