The Relative Risk of a Proposed Project Is Best Accounted

question 5

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 downward if the project is judged to have above-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:

Projective Tests

Psychological assessments that use ambiguous stimuli to evoke responses that reveal aspects of an individual's personality.

Validity

The extent to which a test, instrument, or procedure measures what it is supposed to measure.

Reliability

Refers to the consistency of a research study or measuring test.

Rogers's Theory

A psychological theory developed by Carl Rogers, focusing on his concept of the self and the importance of the self-actualizing tendency in forming a healthy, fully functioning person.