The Greater the Uncertainty About a Project's Forecasted Cash Flows

question 13

True/False

The greater the uncertainty about a project's forecasted cash flows, the larger should be the discount rate applied to cash flows, other things being equal.

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Definitions:

Higher Order Conditioning

A process in behavioral psychology where a conditioned stimulus is paired with a new neutral stimulus, creating a second-level conditioned response.

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, elicits a conditioned response.

Operant Conditioning

A process of behavioral adjustment where the level of an action is modified through the application of rewards or punishments.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response tendency.