Generally, the higher the coefficient of variation a project has, the higher the discount rate it should be assigned.
A higher coefficient of variation denotes greater risk, so investors will require a higher rate of return-thus (all else being equal), a "risk-adjusted" rate.

Question

Quizplus · Accepted Answer

This statement is true. A higher coefficient of variation indicates higher risk, which means investors will require a higher rate of return or a "risk-adjusted" rate.

Generally, the Higher the Coefficient of Variation a Project Has