Question: Firms should adjust for execution risk by ignoring execution risk since it is diversifiable. assigning a higher cost of capital to new projects. noticing missteps

Firms should adjust for execution risk by

ignoring execution risk since it is diversifiable.

assigning a higher cost of capital to new projects.

noticing missteps in the firm's execution of new projects.

capturing this risk in the expected cash flows generated by the project.

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