CFA Level 1: CFA Level 1 Exam Question Answer

CFA Level 1 Exam Question Answer

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Question

Which of the following is/are true?

I. Discounted payback period and simple payback period can produce conflicting project rankings.

II. Independent projects are mutually exclusive.

III. The payback period rule ignores cash flows beyond the payback period.

Answers

Explanations

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A. B. C. D. E. F. G.

C

Independent projects are ones whose cash flows are not dependent on each other while mutually exclusive projects are those which cannot be undertaken simultaneously. It is not necessary for independent projects to be mutually exclusive or vice versa.