Question: The major difference between the risk-adjusted discount rate and the certainty equivalent method of evaluating capital investments is that: A) The risk-adjusted discount rate adjusts

The major difference between the risk-adjusted discount rate and the certainty equivalent method of evaluating capital investments is that:

A) The risk-adjusted discount rate adjusts the expected cash flows downward for risk.

B. The certainty equivalent method adjusts the discount rate down for more risky projects.

C) The certainty equivalent approach requires projects to be discounted at the marginal costs of capital.

D) The risk-adjusted discount rate is larger for projects of greater risk than for projects of lesser risk.

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