Which three the following steps would you complete when adjusting for risk through the discount rate?
A) Add a premium to the risk- free discount rate
B) Calculate net present value, based solely on the premium adjustment
C) Use the risk- adjusted discount rate to calculate net present value
D) Make decisions, based on a subjective judgement of the risk

Question

Quizplus · Accepted Answer

To adjust for risk through the discount rate, you add a premium to the risk-free rate (A), use the risk-adjusted discount rate to calculate NPV (C), and make decisions based on subjective judgment of risk (D).

Which Three the Following Steps Would You Complete When Adjusting