Question
Indicate whether the following are TRUE/FALSE and explain why! (URGENT) 1.In the presence of diversification benefits, when we combine two assets together into a portfolio,
Indicate whether the following are TRUE/FALSE and explain why! (URGENT)
1.In the presence of diversification benefits, when we combine two assets together into a portfolio, the systematic risk of the portfolio will be less than the weighted average systematic risk of the individual assets in the portfolio.
2.The twin advantages with using the IRR method as opposed to the NPV method for project evaluation is that you dont need to worry about what an appropriate risk-adjusted discount rate might be for the project and you will always get the correct answer to the investment decision.
3.When a division of a company utilizes the NPV technique to assess a project, they should always include any costs associated with running the companys head office allocated to the division.
4.Financial risk is reflected in the variability in the returns a company may generate on its assets and is mainly driven by the risks inherent in the industry that the company operates in.
5.Introducing leverage into a firms capital structure may increase the expected returns for shareholders but the impact on share price may still be uncertain.
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