If bankruptcy costs and/or shareholder under diversification are an issue,what measure of risk is relevant when evaluating project risk in capital budgeting?

Question

Quizplus · Accepted Answer

When bankruptcy costs and/or shareholder under diversification are an issue, contribution-to-firm risk, which focuses on the impact of a project on the overall risk of the firm, is the most relevant measure of risk when evaluating project risk in capital budgeting. Total project risk considers only the project's stand-alone risk, while systematic risk and capital rationing risk are not directly related to the concerns mentioned in the question.

If Bankruptcy Costs And/or Shareholder Under Diversification Are an Issue,what