A is inherent in the opportunity cost, orB , used for finding present values. If uncertainty about potential future cash flows rises, then theCwill also rise. This increasing risk results in a higherD and lowerE In the case of stocks and bonds, F translates into G

A risk/ cash flow/profit

B opportunity costs/ coupon rate/discount rate

C bond coupon rate/ prime rate/ stock dividend/ discount rate

D cash flow/ return on equity/ return on asset/ required return

E return on equity/bond coupon rate/ long-term capital structure/ present value

F higher risk/ lower risk

G lower dividend/ lower price/ lower cash flows