Explain Why Analysts and Investors Use Risk-Adjusted Expected Rates of Return

question 8

Essay

Explain why analysts and investors use risk-adjusted expected rates of return as discount rates in valuation.Why do risk-adjusted expected rates of return increase with risk?

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Definitions:

College Students

Individuals enrolled in an institution of higher learning, often pursuing undergraduate or graduate level degrees and experiencing a unique developmental life stage.

Survey

A method of gathering information from a sample of individuals, often used to collect data on opinions, experiences, or behaviors.

Random Sample

A subset of individuals chosen from a larger population, where each member has an equal chance of being selected, ensuring the sample's representativeness.

Large Group

A social grouping that is too large for all members to maintain direct acquaintance and interaction, typically requiring formal structures for communication and decision-making.