GK
ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Probability
|
|
|
Variability
|
|
|
Certainity
|
|
|
None of these
|
Detailed explanation-1: -Risk is the probability of damage, loss or threat. Risk in capital budgeting implies that the decision maker knows the probability of cash flows. The decision maker after analysing the risk will have of fair idea of the cash flows that might arise from the decision that is made.
Detailed explanation-2: -Risk Analysis A capital budgeting risk is the likelihood of a long-term investment failing to generate the expected cash flows. Such risks arise from imperfections in future cash flow estimates, a situation that exposes your business to possibilities of embracing loss-making capital investments.
Detailed explanation-3: -For Capital Budgeting decisions, Standard Deviation is used to calculate the risk associated with the estimated cash flows from the project.
Detailed explanation-4: -The factors that increase riskiness of a capital budgeting project are industry specific risk, competition risk and project risk.
Detailed explanation-5: -corporate risk. international risk (including currency risk) industry-specific risk. market risk. stand-alone risk. project-specific risk. 23-Dec-2021