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Basic Question 15 of 16
If a firm uses the same company cost of capital for evaluating all projects, which of the following is likely?
II. Accepting poor high-risk projects
I. Rejecting good low-risk projects
II. Accepting poor high-risk projects
User Contributed Comments 4
| User | Comment |
|---|---|
| Rotigga | That's why you have to use your judgment and risk-weight the cost of capital for each project, or you run into I and II above. |
| johntan1979 | Type I and type II errors |
| Shaan23 | Look at johntan. Bringin back Unit 3. Like it. |
| cfastudypl | Good application of type I and II statistical errors. Thumps up johntan1979. |
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Learning Outcome Statements
describe principles of capital allocation and common capital allocation pitfalls
CFA® 2024 Level I Curriculum, Volume 2, Module 5.