1. To determine the net present value of an investment requires knowledge of

A. appropriate discount rate.

B. future cash flows.

C. past asset performance.

D. a and b

2. If an investment project has a profitability index greater than one, then the internal rate of return is

A. greater than the cost of capital.

B. equal to the cost of capital.

C. indeterminate; it depends on the length of the project.

D. less than the cost of capital.

3. In portfolio theory, the "efficient frontier" indicates

A. alternatives with equal combinations of risk and return.

B. alternatives with the best combination of risk and return.

C. alternatives with no risk.

D. alternatives with the highest returns.