Examlex
If a project is small relative to the total firm, and if its returns are not highly correlated with the returns on the firm's other assets, then the project may not be very risky in either the within-firm (corporate) or the market risk sense, even if the returns on the project are highly uncertain and thus the project has a high degree of stand-alone risk.
Interest Rate
The percentage charged on a loan or earned through an investment, representing the cost of borrowing or the return on invested capital.
Discounting Project Cash Flows
The process of determining the present value of expected future cash flows of a project using a specific discount rate.
Risk Premium
A component of a rate of interest or return that compensates the investor for bearing some kind of risk.
Pure Play
Refers to a company that focuses on a specific industry segment, offering a narrow and specialized range of products or services.
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