A surprising number of firms use firm risk rather than project risk in evaluating new...

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Finance

A surprising number of firms use firm risk rather than project risk in evaluating new investments (Graham and Harvey, 2001). According to Krger et al.(2015), if managers use a single discount rate within firms, we expect that conglomerates relatively risky divisions and relatively safe divisions.
overreact to; underreact to
underreact to; overreact to
overinvest in; underinvest in
underinvest in; overinvest in
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