Question
QUESTION 6 Speculative risks are symmetrical in the sense that they offer the chance of a gain as well as a loss, while pure risks
QUESTION 6
Speculative risks are symmetrical in the sense that they offer the chance of a gain as well as a loss, while pure risks are those that can only lead to losses.
True
False
QUESTION 7
In theory, reducing the volatility of its cash flows will always increase a company's value.
True
False
QUESTION 8
The basic characteristics of relevant project flows include all of the following except ________.
| cash flows | ||
| incremental flows | ||
| financing flows | ||
| after-tax flows |
QUESTION 9
A firm is considering the purchase of an asset whose risk is greater than the current risk of the firm, based on any method for assessing risk. In evaluating this asset, the decision maker should
| Increase the NPV of the asset to reflect the greater risk | ||
| Reject the asset, since its acceptance would increase the risk of the firm | ||
| Ignore the risk differential if the asset to be accepted would comprise only a small fraction of the total assets of the firm | ||
| Increase the cost of capital used to evaluate the project to reflect the higher risk of the project
|
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Multinational Finance
Authors: Kirt C. Butler
3rd Edition
0324177453, 978-0324177459
