Risk in Capital Investment Proposals: Three Viewpoints

Abstract

In the last twenty years or so there have been many developments in Finance Theory which have increased our understanding of the nature of the risk in a capital investment project. In order to understand these developments it is important to realise that risk can be defined from a number of different viewpoints. This paper will discuss three of these viewpoints. First, it will consider the total risk of a project. This can be thought of as the risk from the viewpoint of a project manager whose career progress depends entirely on the performance of the project. It will then consider risk from the viewpoint of the company and, finally, move on to consider risk from the viewpoint of a well diversified shareholder in the company.

Citation

Hull, J.C. (1986), "Risk in Capital Investment Proposals: Three Viewpoints", Managerial Finance, Vol. 12 No. 3, pp. 12-15. https://doi.org/10.1108/eb013567