One method of accounting for systematic risk for a project involves identifying a publicly traded firm that is engaged in the same business as that project and using its required rate of return to evaluate the project.This method is referred to as

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The method described is commonly known as the pure play method, which assumes that the systematic risk of a project is equivalent to that of a publicly traded firm engaged in the same business. By using the required rate of return of the publicly traded firm as a proxy for the project's required rate of return, the project's systematic risk can be accounted for. Option A is not a recognized method, option B involves creating hypothetical scenarios to analyze risk, and option D involves measuring the impact of changes in inputs on the project's financials.

One Method of Accounting for Systematic Risk for a Project