What are the methods of describing Project Risk?

Q: Should the project be accepted or rejected?

A: Payback Period: It is the period in which the project/investment initial cost is recovered.  The…

Q: Define then discuss Value-at-Risk.

A: The stock market is full of new policies and procedures. It get impacted by change in the government…

Q: Define the term elements associated with project financing?

A: Answer: Project financing is nothing but a long term, zero or minimal recourse funding option…

Q: What is the NPV of the project?

A: Capital budgeting methods are the methods used for finding the profitability of the investment…

Q: What is physical life of project?

A: Physical life of a project is the duration of time in which the project has been fully used and…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: Discuss some ways the company could estimatethe project’s risk, and then explain how risk mightbe…

A: Answer: Company can estimate its project’s risk in the following ways: Important risk factors to be…

Q: Describe the Project selection rules under the IRR criterion?

A: IRR (Internal rate of return) is one of capital budgeting techniques which is used to evaluate the…

Q: How Analysis Period Differs from Project Lives?

A: Analysis period is the time period which is considered by the evaluator while assessing different…

Q: What is the significance of the Value at Risk (VaR) method?

A: The question is based on the concept of Value at Risk (VaR). VaR is a statistical measure of risk in…

Q: What is the Aggregating Risk over Time?

A: Aggregating Risk over time is the measure of a solitary customer's presentation of a foundation or…

Q: What does the equipment replacement investment decision involve?

A: Equipment replacement investment decision is an important form of capital budgeting decisions. In…

Q: What is reinvestment rate risk?

A: The reinvestment rate risk is the potential decline in the interest income that tends to be a result…

Q: What is the project’s MIRR?

A: Rate of return is the expected result of any investment or project. It can be negative or positive.…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: Define diversifiable risk

A: Diversifiable risk It is special to a given business or industry. Regularly known in the feeling of…

Q: What are the pitfalls of project and portfolio?

A: Project portfolio analytics are the tools, algorithms, and heuristics necessary to evaluate…

Q: What are the technique of project appraisal

A: Step 1: Techniques of the project appraisal are: Profitability index Payback period NPV IRR

Q: What is a nonsimple project?

A: There are two types of projects, that is, simple and non simple. These projects are based on the…

Q: Draw a graph showing the feasible set of risky assets, the efficientfrontier, the risk-free asset,…

A: To sketch the graph showing the feasible set of risky assets, the efficient frontier, the risk-free…

Q: Explain risk-neutral valuation

A: A risk-neutral valuation is a probability measure used to help pricing derivatives and other…

Q: What is the project's IRR?

A: Internal Rate of Return (IRR) is defined as the minimum rate of return that gives zero valuation to…

Q: Describe the methods of determining the Project Risk?

A: Project risk is an uncertain event or circumstance that affects at any rate one objective of a task,…

Q: What are the three types of project risk?

A: Answer: Investor risk means that an investment’s future return may not be same as anticipated. So,…

Q: what is net present value in project management?

A: Net present value (NPV) is an important technique that is been used by the project manager in order…

Q: How can break-even analysis be helpful in evaluating project risk

A: Break even analysis helps us in determining that level of sales at which the company is at a point…

Q: How do companies manage risk? What are the factors that contribute to a high-risk project?

A: In business there must be ups and downs in their business surroundings.  In every business there…

Q: What is the nature of research and development costs?

A:

Q: What is option value (of project)?

A: Option value of the project is the real option approach of evaluating projects that views selecting…

Q: How do flexibility options affect projects’ NPVs and risk?

A: Fluctuations factors such as demand, interest rate levels are common which may affect future…

Q: Does the Analysis Period differ from Project Lives? Explain how?

A: In a financial term, the Analysis Period is a period of financial analysis of financial statements…

Q: How do the Analysis Period Equals Project Lives?

A: It is PW analysis's best situation. Set the study time to suit the lives of options, in which all…

Q: When does a project deny the merit consideration?

A: Project is assessed on the basis of various important considerations such as profitability, social…

Q: Explain Initial Project Screening Methods?

A: Following are the Initial Project Screening Methods: The payback period alludes to what extent it…

Q: Define risk

A: Risk can be defined as whenever there are chances that the investments’ actual outcomes are…

Q: How can we consider the Future Worth and Project Balance?

A: The question is based on the concept of evaluation of long term investment, future worth and project…

Q: How can we determine whether the project under consideration is of normal risk?

A: Introduction: Risk is nothing but the variation in real returns obtained as opposed to expected…

Q: How to minimize or eliminate risk using diversification or other means.

A: Diversification is a process investment in multiple assets with the available amount.

Q: Define risk-free asset?

A: Risk-free means that anything which does not have any kind of risk associated with it. They are free…

Q: What are the two stages in risk assessment?

A: Risk assessment is the process which involves analysis & identification of events that can have…

Q: What should be done to calculate accurately a project's true IRR,?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: What are the three types of risk to which projects are exposed?Which type of risk is theoretically…

A: Types of risks associated with the projects are: Budget Risk Time risk Performance Risk Budget…

Q: Briefly explain the three risks of a project? How to measure each risk?

A: Three Basic risks of a project: Cost Risk: The risk that a project may encounter due to excess cost…

Q: Illustrate the main factors of Project Risk?

A: The project risk is defined as the uncertain event or condition that occurs mainly on positive or…

Q: Discuss and critically compare sensitivity analysis and scenario analysis as means of  estimating a…

A: In capital budgeting we look at different projects and determine their financial viability and then…

Q: Name the three of the most basic tools for assessing project risk?

A: The project risk is an unpredictable occurrence or situation that has an effect on at least one…

Q: How can we Consider Project Risk by Discount Rate?

A: In corporate finance, a discount rate is the rate of return used to discount future cash flows back…

Q: Explain Financing Project Development?

A: Introduction  Project finance refers to the funding of long-term projects, such as public…