Which of the following statements is true?A. Companies look for investments with payback periods that are larger than their maximum accepted payback periodB. An investment with a profatibility index less than 1 is profitable and desirableOC. A projected is accepted if the IRR is less than the cost of capitalO D. None of the above are true

Payback periods is not larger than maximum accepted pay back period. Profitability index 1 or more…

Answered: hich of the following statements is…

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hich of the following statements is true?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14MC: This calculation determines profitability or growth potential of an investment, expressed as a...

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Which of the following statements is true?
A. Companies look for investments with payback periods that are larger than their maximum accepted payback period
B. An investment with a profatibility index less than 1 is profitable and desirable
OC. A projected is accepted if the IRR is less than the cost of capital
O D. None of the above are true

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QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable OC.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable O C.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1
Which of the following statements is true? A. Because of flotation costs, dollars raised by retaining earnings must work harder than dollars raised by selling new shares. B. All other things being equal, a call option price will increase, and a put option price will decrease if an exercise price increases. C. Security market line (SML) plots return against total risk which is measured by the standard deviation of returns. D. Because potential long-term returns, income from rent-payments, diversification, and inflation hedge, real-estate would be a good investment.
True or False. and briefly explain. a. Under the Capital Asset Pricing Model (CAPM), if a stock has a zero beta, then it must be identical to the riskfree asset. b. For Value at Risk (VaR) to be useful, the returns have to be normally distributed. c.If the borrowing rate is higher than the lending rate, a particular risk-averse investor can achieve a maximized utility score of UC* by choosing optimally. Now if the borrowing rate is equal to the lending rate, this investor must be able to achieve a utility score higher than UC*
This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero A. internal race of return (IRR) method B. net present value (NPV) C. discounted cash flow model D. future value method
Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.
If the internal rate of return (IRR) is less than the cost of capital, then the investment is acceptable. Group of answer choices True False
Consider two investment opportunities A and B. Investment A: Expected return = 0.08, Standard deviation = 0.06 Investment B: Expected return = 0.24, Standard deviation = 0.08 Which investment would you choose A or B? Provide the rationale behind your decision. b. If company is selecting projects with the negative NPV, what impact this decision would have on the share price of the company c. While forecasting future sales, internal sales forecast is more appropriate or external sales forecast? d. Why are dividends the basis for the valuation of common stock? e. When the constant growth dividend valuation model is used to explain a stock's current price, the quantity (ke - g) represents the expected dividend yield. Is this statement right or wrong? Explain.
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