What is risk adjusted discount rate, Financial Management

Assignment Help:

Q. What is risk adjusted discount rate?

The risk adjusted discount rate includes two rates viz

(i) Risk-free rate: - Risk free rate is the usual rate or the usual discount rate that takes care of time element and

(ii) Risk Premium Rate: - Risk Premium Rate is the excess rate or extra rate that takes care of the risk factor.

Therefore the risk adjusted discount rate is the usual or normal discount rate for the time factor plus the extra or additional discount rate.


Related Discussions:- What is risk adjusted discount rate

Explain the market analysis of events, Question 1 Describe the Cost Vol...

Question 1 Describe the Cost Volume Profit analysis. Explain its features, objectives and elements(CVP analysis) Question 2 Write in detail about the classification of

Syntax of accounting procedure, Syntax of Accounting Procedure The gen...

Syntax of Accounting Procedure The general accounting practices are: (a)  Do not consider any income or gain till the similar is realised in cash; (b)  Create or make pr

Please identify the largest potential threat, Using Southwest Airlines as a...

Using Southwest Airlines as an example, please identify the largest potential threat, the strategy employed, and what types of capital budgeting projects would be used to operation

Compare potential liability of owners of proprietorships, Compare and contr...

Compare and contrast the potential liability of owners of proprietorships, partnerships (general partners), and corporations. The sole proprietor has infinite liability for mat

Advantages and disadvantages of accounting rate of return, Advantages of AR...

Advantages of ARR: It is simple to calculate and easy to catch. With the help of this technique, direct comparisons among proposed projected of varying lives with no bu

Under what circumstances is a warrant''s value high, Under what circumstanc...

Under what circumstances is a warrant's value high ?  Explain. A warrant's value would be elevated when the stock price, time to expiration, and/or expected stock price volatil

Types of companies likely to have high operating leverage, Give two example...

Give two examples of types of companies likely to have high operating leverage.Find examples other than those cited in the chapter. Long distance electricity generating compani

Ratio calculations from financial statements, Ricardo Martinez has prepared...

Ricardo Martinez has prepared the following financial statement projections as part of his business plan for starting the Martinez Products Corporation.  The venture is to manufact

investment, what are the stages involved in investment decision makin

what are the stages involved in investment decision making

Cash management - managing excess cash, Cash management is about managing ...

Cash management is about managing excess cash also. The response of management must depend on whether the surplus is large and how long it is likely to exist. If the balance is

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd