Question

How should the risk discount rates for different products be determined?

a.

By maintaining a fixed rate for all products to ensure consistency.

b.

By setting rates arbitrarily without considering the relative risk of each product.

c.

By adjusting rates to reflect the relative risk of each product.

d.

By disregarding product-specific risks and focusing solely on market trends.

Answer: (c).By adjusting rates to reflect the relative risk of each product. Explanation:The risk discount rates for different products should be determined by adjusting the rates to reflect the relative risk associated with each product. This ensures that the pricing adequately accounts for the varying levels of risk across different products.

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Q. How should the risk discount rates for different products be determined?

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