Question
a.
Because it doesn't consider the market's assessment of the company's shares
b.
Because it doesn't differentiate between risky and non-risky projects
c.
Because it doesn't account for the company's long-term profitability
d.
Because it doesn't reflect the specific risks associated with individual projects
Posted under IC 92 Actuarial Aspects of Product Development
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Q. Why can't the overall rate of return from the Capital Asset Pricing Model (CAPM) be directly used as the risk discount rate in pricing models?
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