The ____ makes risky projects less acceptable by simply lowering the cash flow estimates themselves.

A) overlay approach
B) pure play method
C) certainty equivalent approach
D) accounting beta method

Question

The ____ makes risky projects less acceptable by simply lowering the cash flow estimates themselves.A) overlay approachB) pure play methodC) certainty equivalent approachD) accounting beta method

Pearl Bolton · Accepted Answer

Final Answer : C, Explanation :  The certainty equivalent approach adjusts the cash flows for risk by reducing them to a level that an investor would consider as certain. This makes risky projects less attractive as the cash flow estimates are lowered. The other options, such as the overlay approach, pure play method, and accounting beta method, do not directly adjust cash flows for risk in this manner.

The ____ makes risky projects less acceptable by simply lowering the cash flow estimates themselves.

A) overlay approach
B) pure play method
C) certainty equivalent approach
D) accounting beta method

Definitions

Learning Objectives

Learning Objectives

Related questions