The Amount by Which the Required Discount Rate Exceeds the Risk-Free

question 60

Multiple Choice

The amount by which the required discount rate exceeds the risk-free rate is called

• A) the opportunity cost.
• B) the risk premium.
• C) the risk equivalent.
• D) the excess risk.

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Definitions:

Specialized Expertise

Specific knowledge or skills in a particular area or field that sets an individual or group apart.

Appropriate Way

The most suitable or proper method to achieve a specific goal or to handle a situation.

Output Controls

Mechanisms put in place to measure the results of operations or performance to ensure that goals and objectives are met.

Managing by Exception

A management strategy where leaders only intervene in operations when performance metrics fall outside of pre-set acceptable ranges.