Which of the Following Is True of Tracking Error and the Present

question 1

Multiple Choice

Which of the following is true of tracking error and the present value of the cash flows of a project?

• A)If a tracking portfolio for the future cash flows of a project generates tracking error with zero systematic risk and zero expected value,the market value of the tracking portfolio is the undiscounted cash flows of the project.
• B)If a tracking portfolio for the future cash flows of a project generates tracking error with zero systematic risk and zero expected value,the market value of the tracking portfolio is equal to the project?s future cash outflows.
• C)If a tracking portfolio for the future cash flows of a project generates tracking error with zero systematic risk and zero expected value,the market value of the tracking portfolio is equal to the project?s future cash inflows.
• D)If a tracking portfolio for the future cash flows of a project generates tracking error with zero systematic risk and zero expected value,the market value of the tracking portfolio is the present value of the project?s future cash flows.

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