What does the term “risk” mean in the context of capital budgeting
What does the term “risk” mean in the context of capital budgeting; to what extent can risk be quantified; and, when risk can be quantified, is the quantification based primarily on statistical analysis of historical data, or, on subjective judgmental estimates?To answer these questions you should consider the following:What are the three types of risk that are relevant in capital budgeting?How is each of these risk types measured, and how so they relate to one another?How is each type of risk used in the capital budgeting process?
