The Relative Risk of a Proposed Project Is Best Accounted

question 63

Multiple Choice

The relative risk of a proposed project is best accounted for by which of the following procedures?

• A) Adjusting the discount rate upward if the project is judged to have above-average risk.
• B) Adjusting the discount rate upward if the project is judged to have below-average risk.
• C) Reducing the NPV by 10% for risky projects.
• D) Picking a risk factor equal to the average discount rate.
• E) Ignoring risk because project risk cannot be measured accurately.

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Definitions:

Pupil

The opening in the iris of the eye that allows light to enter the retina.

Light

Electromagnetic radiation within a certain portion of the electromagnetic spectrum, perceived by the human eye as brightness of varying wavelengths and colors.

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, contributing to the eye's ability to focus light.

Lens

A curved piece of glass or other transparent materials used to refract light, focus images, and aid vision or in photography.