Free Online CFA Level 1 Mock Exam 5

10. Which of the following is a mistake managers may make when analyzing capital allocation projects?

A. Spending the entire investment budget.

B. Adjusting the discount rate for the risk inherent in the project.

C. Incorporating economic responses into the investment analysis

Correct Answer: A

Answer Explanation:

B Incorrect because it is an error not to use an appropriate risk-adjusted discount rate.

C is incorrect because it is an error not to incorporate economic responses into the investment analysis.

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