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5 . Risk analysis in capital budgeting Projects differ in risk, and risk analysis is a critical component of the capital budgeting process. Evaluating risk
Risk analysis in capital budgeting Projects differ in risk, and risk analysis is a critical component of the capital budgeting process. Evaluating risk is an important part of the capital budgeting process. Which of the following is measured by the variability of the projects expected returns? Standalone risk Corporate, or withinfirm, risk Market, or beta, risk The problem with using corporate, or withinfirm, risk when trying to adjust for projects that are more risky or less risky than a firms average project is that these adjustments are extremely subjective and difficult to justify.
Risk analysis in capital budgeting
Projects differ in risk, and risk analysis is a critical component of the capital budgeting process.
Evaluating risk is an important part of the capital budgeting process. Which of the following is measured by the variability of the projects expected returns?
Standalone risk
Corporate, or withinfirm, risk
Market, or beta, risk
The problem with using corporate, or withinfirm, risk when trying to adjust for projects that are more risky or less risky than a firms average project is that these adjustments are extremely subjective and difficult to justify.
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