Risk-adjusted discount rate

Definition:

The rate established by adding a expected risk premium to the risk-free rate in order to determine the present value of a risky investment.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Bankruptcy

Inability to pay debts. In bankruptcy of a publicly owned entity, the ownership of the firm's assets is transferred from the stockholders to the bondholders.

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