Though they contain the major points sought, the student's response should provide further insight into many of the points. Simply repeating the major bullet points does not necessarily demonstrate the required level of understanding of the subject. Mutually exclusive investments are economically inter-related because only one can be accepted. The acceptance of one implies the complete disappearance of the cash flows of the other. This is an extreme type of investment inter-relatedness.
Capital rationing is another example of inter-relatedness of a mutually exclusive nature.
Because of capital constraints, the acceptance of any one project decreases the remaining capital available to all others, and thus lowers the likelihood of their acceptance, and thus obtaining their cash flows. One valuable way of looking at the capital rationing decision is that it forces the analyst to choose among all of the possible combinations of investment projects which can be accepted within the budget constraint, and each such combination is thus mutually exclusive with all others. The answer can be broadened to include the example from the textbook, section 6.3, relating to the funeral parlour and the rock concert arena. The spectrum between pure negative and pure positive can be commented on, with perhaps mention of economic independence, this is where acceptance or rejection of one project has no effect upon the other's cash flows. To deal with economic relatedness all possible combinations of inter-relatedness investments must be specified, along with their unique cash flows and NPVs.