The Greatest Difficulty with Cost-Benefit Analysis of a Public Project

question 250

Multiple Choice

The greatest difficulty with cost-benefit analysis of a public project is determining

• A)whether government revenue is sufficient to cover the cost of the project.
• B)which contractor should be awarded the project.
• C)the cost of the project.
• D)the value or benefit of the project.

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Definitions:

Rate of Return

The percentage of net gain or loss on an investment over a specified period, showing the efficiency of an investment.

Fair Game

An investment prospect that has a zero risk premium.

Risk Premium

The extra return above the risk-free rate that investors require to compensate them for choosing to invest in a risky asset.

Portfolio Volatility

A measure of the dispersion of returns for a given security or market index, indicating how much the total value of the portfolio's assets fluctuates over time.