Which of the Following Procedures Best Accounts for the Relative

question 36

Multiple Choice

Which of the following procedures best accounts for the relative risk of a proposed project?

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

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Definitions:

Preventive Strategies

Approaches designed to stop problems or issues from occurring, aiming to limit or eliminate negative outcomes through proactive measures.

Problem Solving

Problem solving is the process of identifying issues, analyzing possible solutions, and implementing strategies to overcome challenges.

Active Involvement

Participation or engagement in activities or causes with significant interest and commitment, often to effect change.

Adequate Funding

Sufficient financial resources allocated to support a project, program, or initiative.