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✅ The correct answer is C.
Sum of discounted cash flows is best defined as project net present value. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.

✅ The correct answer is C.
Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as diversifiable risk. Diversifiable risk is the possibility that there will be a change in the price of a security because of the specific characteristics of that security. Diversification of an investor’s portfolio can be used to offset and therefore eliminate this type of risk.

✅ The correct answer is B.
Risk affects any firm with factors such as war, recessions, inflation and high interest rates is classified as market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.

✅ The correct answer is B.
Company low earning power and high interest cost cause financial changes which have high return on assets. The higher the ROA number, the better, because the company is earning more money on less investment.

✅ The correct answer is A.
An additional desired compensation by investors for assuming an additional risk on investment is classified as risk premium. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset’s risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.