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Adjusting for Risk in the Capital Budget of a Growth-Oriented Company: Comment**

Published online by Cambridge University Press:  19 October 2009

Robert H. Litzenberger  and
Charles P. Jones
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Extract

Many important contributions to the body of theoretical literature in business finance are built upon the pioneering efforts of others. In a recent article in this Journal, Vaughn and Bennett attempt to build a risk adjusted capital budgeting framework upon foundations laid by Gordon, Miller and Modigliani, Sharpe, Solomon, and others. Unfortunately, they are building a house of straw. Their knowledge of the contributions of their predecessors is superficial, and their approach is inconsistent with some of the basic tenets of business finance.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 4 , Issue 3 , September 1969 , pp. 301 - 304
Copyright
Copyright © School of Business Administration, University of Washington 1969

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References

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