The best deﬁnition of capital budgeting is:
A) The possibility of conﬂicts between shareholders and management in a large corporation.
B) The process of planning and managing a ﬁrm's long-term investments.
C) Financial markets where long-term debt and equity securities are bought and sold.
D) The purchase or sale of securities whose value derives from the price of another, underlying, asset.
E) The annual process of providing a benchmark for ﬁnancial performance.

Question

Quizplus · Accepted Answer

Capital budgeting involves the process of planning and managing a firm's long-term investments, including determining which projects to invest in and how to fund them. It is a crucial aspect of financial management for any business, as it helps ensure that the company's resources are allocated in the most effective way possible to generate long-term profitability. Choices A, C, D, and E are not accurate definitions of capital budgeting.

The Best Deﬁnition of Capital Budgeting Is