An Automatic Bias Against High-Risk Projects Is Created By

question 49

Multiple Choice

An automatic bias against high-risk projects is created by:

• A) using the IRR technique, which produces an intrinsic return which is risk adjusted.
• B) using a higher rate than the cost of capital when applying NPV and IRR to risky projects.
• C) adjust NPVs and IRRs up when evaluating risky projects.
• D) make an intuitive judgment about risk after the analysis is done.

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Definitions:

Specialty Hair Salon

A personal grooming establishment that focuses on specific hair services or caters to particular types of hair or beauty needs.

Market Segmentation

The process of dividing a market of potential customers into groups, or segments, based on different characteristics such as demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better tailor marketing strategies.

Limited Marketing

A strategy that involves targeting a specific market segment with a concentrated and streamlined marketing mix.

Market Fragmentation

The division of a market into smaller segments with varied preferences, characteristics, or needs, often resulting in increased competition.