Question

Which of the following is NOT a reason why a​ firm's financial managers must take great care when making investment​ decisions?

A.These investment decisions determine the​ corporation's mix of debt and equity.
B.These investments determine the longminus−term directions in which the company may move.
C.These investment decisions determine whether the firm will add value for its owners.
D.These investment decisions typically involve substantial costs which must be carefully weighed against their potential benefits.

Answer 1

The mix of debt and equity is not directly determined by investment decisions, but by how the firm finances those investments, which is the reason not related to why financial managers must take care when making investment decisions.

Step-by-step explanation:

The reason which is NOT a factor for why a firm's financial managers must be cautious when making investment decisions is "A.

These investment decisions determine the corporation's mix of debt and equity." This statement is not entirely accurate because a firm's mix of debt and equity is more influenced by how the firm finances its operations and investments, rather than the investment decisions themselves.

Key factors that financial managers must consider when making investment decisions include assessing long-term strategic directions (B), adding value for owners (C), and considering the substantial costs and potential benefits of investments (D).