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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.
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Which one is true 1.the higher the discount rate the lower the cost of trade credit 2.the higher the discount rate the higher the cost of trade credit 3.cost of trade credit duri
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