In the risk-adjusted discount rate approach, increasing risk aversion is reflected in a cost of capital that exceeds the:
A)risk-free rate.
B)risk free rate and falls with increasing risk.
C)risk free rate and falls with decreasing risk.
D)none of these.

Question

Quizplus · Accepted Answer

In the risk-adjusted discount rate approach, increasing risk aversion leads to a higher cost of capital that exceeds the risk-free rate and decreases as the perceived risk decreases.

In the Risk-Adjusted Discount Rate Approach, Increasing Risk Aversion Is