Why should firms that own and operate multiple businesses that have different risk characteristics
use business-specific, or divisional costs of capital?
A) Not all divisions have equal risk and the firm might accept projects whose returns are higher
than are deemed appropriate.
B) Not all lines of business have equal risk and it is likely that the firm will accept projects whose
returns are unacceptably low in relation to the risk involved.
C) Not all business divisions have equal risk and the firm will likely become less risky in the
future.
D) Use of the same weighted average cost of capital for all divisions may result in too much
money being allocated to the least risky division.
B
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When British entrepreneur Richard Branson established the first Virgin Megastore in France, he invested a great deal of money to develop a retail space on the famous Champs-Elysées
Judging by the approach Branson used, he and his management team must have viewed France as: A) culturally close and easy to enter. B) culturally distant and easy to enter. C) culturally close and difficult to enter. D) culturally distant and difficult to enter. E) culturally difficult and easy to enter.
The source of risk related to political unrest and exchange rate changes are _________________________
Fill in the blank(s) with correct word
An advantage of the corporate form is the ability of the board to hire professional managers to attend to the corporation's affairs
Indicate whether the statement is true or false
The use of a cash register is an example of a physical control
Indicate whether the statement is true or false