Chapter 1 - Chapter 1: 1. A sound investment decision is to...

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Chapter 1: 1. A sound investment decision is to seek out and acquire assets that are worth more than they cost. Ultimately, the worth, or value, of an investment depends on: A) the expected future prices of the investment’s assets. B) the current market prices of the investment’s assets. C) the investment’s ability to generate cash flows and the riskiness of those cash flows. D) all of the above. Answer: C 2. Empirical studies show that the most new ventures fail because of: A) neglect and inexperience. B) economic and financial troubles. C) unsuccessful idea and implementation. D) all of the above. Answer: B 3. What are the most important differences between corporate finance and entrepreneurial finance? Answer: The separability of investment decisions from financing decisions The role of diversification of risk as a determinant of investment value The extent of managerial involvement by outside investors The importance of options as a determent of project value The effect of information problems on the firm’s ability to undertake a project
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Chapter 1 - Chapter 1: 1. A sound investment decision is to...

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