Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project. 2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to derive a discount rate for investment projects.
Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project. 2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to derive a discount rate for investment projects.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider the following two statements concerning risk analysis:
1. Sensitivity analysis provides clear decision rules concerning acceptance or rejection of an investment project.
2. The risk-adjusted discount rate adds a risk premium to the expected rate of inflation to derive a discount rate for investment projects.
Which one of the following combinations (true/false) relating to the above statements is correct?
Select one:
a.
Statement 1 is False & Statement 2 True
b.
Statement 1 is False & Statement 2 False
c.
Statement 1 is True & Statement 2 is False
d.
Statement 1 is True & Statement 2 is True
e.
None of these answers are correct
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