CFA Practice Question

There are 155 practice questions for this study session.

CFA Practice Question

Which rate should be used to discount cash flows in decision trees?

A. Risk-adjusted rate
B. Risk-free rate
C. It depends.
Correct Answer: C

If the approach is used as a substitute for risk-adjusted value, the risk-free rate should be used. If the approach is used as a complement, then a risk-adjusted discount rate should be used.

User Contributed Comments 0

You need to log in first to add your comment.