Adjusting Discount Rates for Risk

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Abstract:

Determining the premium to be added to a discount rate for evaluating a risky investment is rather straightforward and easily understood when the annual risk probability is known. However, if the risk is best perceived as an accumulated "lump" at some future time, then this determination should be made with caution. The duration over which the lumps accumulate acutely influences magnitude of the risk premium.

Document Type: Journal Article

Affiliations: Professor of Forest Resources, Institute of Natural and Environmental Resources, University of New Hampshire, Durham

Publication date: May 1, 1979

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  • The Journal of Forestry is the most widely circulated scholarly forestry journal in the world. In print since 1902, the Journal has received several national awards for excellence. The mission of the Journal of Forestry is to advance the profession of forestry by keeping forest management professionals informed about significant developments and ideas in the many facets of forestry: economics, education and communication, entomology and pathology, fire, forest ecology, geospatial technologies, history, international forestry, measurements, policy, recreation, silviculture, social sciences, soils and hydrology, urban and community forestry, utilization and engineering, and wildlife management. The Journal is published bimonthly: January, March, May, July, September, and November.
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