When comparing NPV and IRR, which is incorrect? * . With NPV, the discount rate can be adjusted to take into account increased risk and the uncertainty of cash flows With IRR, cash flows can be adjusted to account for risk NPV can be used to compare investments of various size or magnitude Both NPV and IRR can be used for screening decisions

When comparing NPV and IRR, which is incorrect? * . With NPV, the discount rate can be adjusted to take into account increased risk and the uncertainty of cash flows With IRR, cash flows can be adjusted to account for risk NPV can be used to compare investments of various size or magnitude Both NPV and IRR can be used for screening decisions

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 3QE

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Similar questions

When comparing NPV and IRR, which is incorrect? With NPV, the discount rate can be adjusted to take into account increased risk and the uncertainty of cash flows With IRR, cash flows can be adjusted to account for risk NPV can be used to compare investments of various size or magnitude Both NPV and IRR can be used for screening decisions
When comparing investments that have different means, the measures the relative riskiness of each investment and is a better indicator of risk than the standard deviation.
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The desired rate of return on an investment should reflect the degree of risk involved. A. True B. False
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Discuss how risk can be reduced by diversification in a two-asset portfolio. Your discussion should include the impact of correlation and covariance on a portfolio. Use examples to show the main drivers that bring down the risk of a two-asset portfolio.
1. Why methods and tools of the statistics are so important in investment decision making. 2. Explain, why doesn’t an estimated absolute covariance number tell the investor much about the relationship between the returns on the two assets?
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discuss the importance of considering risk when analyzing investments?