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What should be the first step of a response policy?
Capital Asset Pricing Model
A theoretical framework used to determine the expected return on an investment by accounting for its inherent risk, usually represented as the risk-free rate plus the risk premium.
Risk Premium
Maximum amount of money that a risk-averse individual will pay to avoid taking a risk.
Expected Return
The predicted average of possible returns for an investment, accounting for the probability of each outcome and its associated return.
Risk-Adjusted Discount Rate
A discount rate that adjusts for the risk of the cash flows, giving a more accurate present value estimate.
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