39 fishers separation theorem means that a a company

39. Fisher's separation theorem means that:
A. a company can make an investment decision even if all shareholders do not agree.
B. a company should invest beyond the point where the net present value of the marginal unit of investment is
zero.
C. a company should invest up to a point where the rate of return on the marginal unit of investment equals the
market interest rate.
D. none of the given options is correct.
AACSB: Analytic
Blooms: Knowledge
Difficulty: Easy
EQUIS: Apply knowledge
Graduate Attributes: Problem-solving
Learning Objective: 02-01 Explain how a company's managers can, in principle, make financial decisions that will be supported by all shareholders
Section: 2.2 Fisher's Separation Theorem: a simplified example
40. Which of the following statements is false?
AACSB: Analytic
Blooms: Knowledge
Difficulty: Easy
EQUIS: Apply knowledge
Graduate Attributes: Problem-solving
Learning Objective: 02-01 Explain how a company's managers can, in principle, make financial decisions that will be supported by all shareholders
Section: 2.1 Introduction

41. Consider the following diagram:
In this diagram, if the optimal policy is chosen, the company invests the amount:
E
1
1
E
AACSB: Analytic
Blooms: Application
Difficulty: Medium
EQUIS: Apply knowledge
Graduate Attributes: Problem-solving
Learning Objective: 02-02 Explain how the existence of a capital market makes it possible for the company to make decisions acceptable to all
shareholders
Section: 2.3 Fisher's Separation Theorem: a formal approach

42. Consider the following diagram:
In the diagram, if the optimal policy is chosen then shareholder 2, with the lower indifference curve, will optimise
her consumption by:
AACSB: Analytic
Blooms: Application
Difficulty: Medium
EQUIS: Apply knowledge
Graduate Attributes: Problem-solving
Learning Objective: 02-02 Explain how the existence of a capital market makes it possible for the company to make decisions acceptable to all
shareholders
Section: 2.3 Fisher's Separation Theorem: a formal approach

43. In the absence of _______________ companies are unable to make decisions about dividend policy that will
please all share holders.