Liberty BUSI 320 Chapter 13 Reading Assignment Answers Complete Solutions
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Beta is denoted by the symbol
The shorter the time horizon, the less enters the forecast.
Given the following information, the expected value is $ .
True or false: US government bonds are more risky than investing in a diamond mine in Africa.
The primary objective(s) in choosing between various combinations of investments ___.
Investments that are ___ do little or nothing to diversify risk.
Even though the expected value of cash flows for an investment are forecasted to be constant, moving further into the future causes the range of outcomes and probabilities to____
Simulation models are used to test changes in _____.
In a decision tree, the branches represent the difference between
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A firm can reduce overall risk exposure by investing in a product or business whose cyclical fluctuations are different from the firm. This risk reduction phenomenon is demonstrated by a ____.
The standard deviation is denoted by the symbol
A simulation model using random variables for inputs is called a
Investing in a 30-day U.S. government obligation has ____ risk?
A correlation coefficient of +.5 indicates that the investments have a correlation that is
Investments that are uncorrelated
Investments that are negatively correlated
True or false: a decision tree is a graphical comparison resembling the branches of a tree.
Risk in terms of capital budgeting is defined as
The ability to make accurate forecasts diminishes over
An advantage of the payback method is
The advantages of using the MIRR
An alternative method that combines the reinvestment assumptions of the NPV with the IRR is the
Capital rationing hinders a firm from achieving maximum
Capital rationing is an
Characteristics of an investment can be summarized using the
The coefficient of correlation measures the extent in which projects are
Considering the impact of an investment on the overall risk of the firm is known as the
A correlation coefficient of +.5 indicated that the investments have a correlation that is
Depreciation is added back to accounting flows to provide cash flows because depreciation is
A disadvantage of the payback method is
Even though the expected value of cash flows for an investment are forecasted to be constant moving further into the future causes the range of outcomes and probabilities to
Finance professionals prefer the what method for capital budgeting decision
A firm can reduce overall risk exposure by investing in a product or business whose cyclical fluctuations are different from the firm. This risk reduction phenomenon is demonstrated by a
If the firm considers a riskier investment, v=.85 versus v=.40, a risk will be added to compensate for an increase in V of 0.45.
If the NPV for an investment is less than zero the firm will
An important investment characteristic required to apply the net present value profile is
In a mutually exclusive investment decision the firm will choose the investment that has the highest
An investment can perform better than another at low discount rates and perform poorly to the other at high discount rate due to the
Investments considered to have normal risk will be discounted at
In what order are the steps required in the decision making process of a good capital budgeting program