In capital budgeting decisions, risk is a measure of the _____.

Question

Quizplus · Accepted Answer

Risk in capital budgeting decisions refers to the project's sensitivity to changes in various factors such as market conditions, interest rates, competition, and government regulations. A project with high risk is more sensitive to these changes and is considered riskier than a project with low risk, which is less sensitive to changes. Therefore, D is the best choice since it accurately reflects the concept of risk in capital budgeting.

In Capital Budgeting Decisions, Risk Is a Measure of the _____