CFA Practice Question

There are 155 practice questions for this study session.

CFA Practice Question

If the approach of simulation is used as a substitute for risk-adjusted value, ______ should be used as the discount rate.
A. the risk-free rate
B. a risk-adjusted discount rate
C. the market rate
Explanation: The cash flows should be discounted back at a risk-free rate to arrive at value.

User Contributed Comments 1

User Comment
chriswwu It should be the simulated risk-free rate, not the current market risk-free rate (i.e., implied by the yield curve at time 0), right?
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