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:

Peripheral Organs

Peripheral organs refer to the organs and systems located outside of the central nervous system, mainly involved in carrying out the specific functional tasks of the body.

CCK

Cholecystokinin (CCK) is a hormone that stimulates the digestion of fat and protein by releasing bile from the gallbladder and digestive enzymes from the pancreas.

Genetically Obese Rats

Rats that become obese due to genetic predispositions, often used in studies to understand obesity in humans.

Lateral Hypothalamus

A part of the hypothalamus in the brain that plays a significant role in controlling hunger and thirst.