American_Bankers_Association
CTFA · Question #46
You are considering two mutually exclusive investment proposals, project A and project B B's expected value of net present value is $1,000 less than that for A and A has less dispersion. On the…
The correct answer is A. Project A dominates project B. See the full explanation below for the reasoning.
Investment Management
Question
You are considering two mutually exclusive investment proposals, project A and project B B's expected value of net present value is $1,000 less than that for A and A has less dispersion. On the basis of risk and return, you would say that
Options
- AProject A dominates project B
- BProject B dominates project A
- CProject A is more risky and should offer greater expected value
- DEach project is high on one variable, so the two are basically equal
How the community answered
(46 responses)- A83% (38)
- B4% (2)
- C2% (1)
- D11% (5)
Topics
#project dominance#risk-return tradeoff#net present value#investment comparison
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