Using the Risk-Adjusted Discount Rate Approach,projects with High Coefficients of Variation

question 62

Multiple Choice

Using the risk-adjusted discount rate approach,projects with high coefficients of variation will have ______ net present values than projects with low coefficients of variation.

• A) somewhat higher
• B) substantially higher
• C) lower
• D) no change on

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Definitions:

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Fixity

In economics, refers to the inelasticity or immobility of certain factors, like land or capital, which can limit responsiveness to changes in market conditions.

Long Run

A period of time sufficient for all adjustments to be made in an economy or market, considering all possible changes in production.

Average Costs

The total cost of production divided by the number of units produced, used to determine the average expense per unit.