Risk-adjusted discount rate is based on the notion that investors require higher rates of return on more risky projects.

Question

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Risk-adjusted discount rate is a common method used to determine the appropriate rate of return for an investment considering the level of risk associated with it. The higher the risk, the higher the rate of return required by investors to compensate them for taking on that risk. Therefore, A) True, investors require higher rates of return on more risky projects.

Risk-Adjusted Discount Rate Is Based on the Notion That Investors