Section 1
The Relationship Between Risk and Capital Budgeting
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Risks Involved in Capital Budgeting
The process of capital budgeting must take into account the different risks faced by corporations and their managers.
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Risk Aversion
Risk aversion describes how people react to conditions of uncertainty and has implications for investment decisions.
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Approaches to Assessing Risk
Some of the quantitative definitions of risk are grounded in statistical theory and lead naturally to statistical estimates, but some are more subjective.