Projects with a small chance of being acceptable and a broad range of expected cash flows are more risky than projects having a high chance of being acceptable and a narrow range of expected cash flows.

Question

Quizplus · Accepted Answer

This statement is true because projects with a small chance of being accepted require a higher rate of return to compensate for the higher risk involved. Additionally, a broad range of expected cash flows means there is more uncertainty in the future cash flows, making the project riskier. On the other hand, projects with a high chance of being acceptable and a narrow range of expected cash flows are less risky because there is a greater certainty of expected cash flows.

Projects with a Small Chance of Being Acceptable and a Broad