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    Question

    A project has NPV of ₹5 lakh and standard deviation of

    cash flows is high. What does it indicate?
    A High return with low risk Correct Answer Incorrect Answer
    B Stable cash flows Correct Answer Incorrect Answer
    C High risk despite positive NPV Correct Answer Incorrect Answer
    D Negative IRR Correct Answer Incorrect Answer

    Solution

    NPV measures return, while standard deviation indicates risk. High deviation = volatile/uncertain cash flows.

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