Shareholders in a Levered Firm Might Wish to Accept a Negative

Multiple Choice

Shareholders in a levered firm might wish to accept a negative net present value project if it:

A) increases the standard deviation of the returns on the firm's assets.
B) lowers the variance of the returns on the firm's assets.
C) lowers the firm's volatility.
D) diversifies the cash flows of the firm.
E) decreases the risk that a firm will default on its debt.