Solved

A Firm Knows That It Will Go Bankrupt If It

Question 6

Multiple Choice

A firm knows that it will go bankrupt if it loses more than £10m on a project. The expected NPV is £16m, with a standard deviation of £13m. What is the Z- factor of the bankruptcy event?


A) +2
B) +7.5
C) - 2
D) - 0.31

Correct Answer:

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