An Increase in the Risk Associated with a Future Stream

question 59

True/False

An increase in the risk associated with a future stream of cash should result in an increase in the discount rate used in the present value calculation.

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Definitions:

Organizational Form

The structure or framework adopted by a business or entity that dictates its operational and governance approach, such as a corporation, partnership, or sole proprietorship.

Owners' Acts

Legal actions or decisions made by the owners of a property or business.

Franchisee

One receiving a license to use another’s (the franchisor’s) trademark, trade name, or copyright in the sale of goods and services.

Independent Businessperson

An individual who operates and manages their own business, making decisions independently, often bearing the risks and rewards of the enterprise.