Risk Measures
Which statement about Discounted Cash Flow (DCF) analysis is FALSE?
NPV = 0 means discount rate = IRR exactly. Positive NPV = good investment.
Complete Analysis & Legal Rationale
This statement is FALSE. When NPV equals zero, the discount rate used IS the IRR (they are equal, not less than). By definition, IRR is the discount rate that makes NPV equal to zero.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
TRUE - Positive NPV means returns exceed the discount (required) rate.
TRUE - DCF explicitly accounts for time value by discounting future cash flows.
TRUE - Higher discount rates reduce the present value of future cash flows.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.