Risk: It is variability between actual return and estimated return in a certain future. The decision maker draws a probability of certain return based on historical data. Uncertainty: The decision makers are not able to draw probability of an outcome in uncertain future. The facts are unknown in uncertain future. Risks associated with Projects are: Stand-Alone risk: It is a risk associated with single project alone. Corporate risk: It is a risk of a choosing a project which effects the overall company profits or positions. Market risk: It is a risk of choosing a project which effects the shareholders position in company. Liquidity risk : To face difficulty in converting an investment into cash. It means investors are not able to get fair value on selling its investment when they need cash immediately. Inflation risk: It is a loss of purchasing power. It means the quantity of goods you bought in Rs. 5 now you can buy in Rs.8. Due to the time variation the va
This blog is totally for education purpose which helps to solve finance related numerical like time value of money, annuity ,perpetuity, technique of capital budgeting, cost of capital, working capital management and hire purchase etc.