If the Risk Adjusted Discount Rate Method and the Certainty

question 48

Multiple Choice

If the risk adjusted discount rate method and the certainty equivalent methods are to give the same results,then the certainty equivalent factor (at) must equal (where rf is the risk-free interest rate,and "k" is the risk adjusted cost of capital)

• A)(1 + r_f)^t times (1 + k)^t.
• B)(1 + k)^t divided by (1 + r_f)^t.
• C)(1 + r_f)^t divided by (1 + k)^t.
• D)(1 + k)^t minus (1 + r_f)^t.

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Definitions:

Change

The process or act of becoming different in form, nature, or quality, often implying improvement or evolution.

Organizational Change

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Negative

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