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Valuation Under Uncertainty: Comment

Published online by Cambridge University Press:  19 October 2009

Alexander A. Robichek  and
Stewart C. Myers
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Extract

In “Valuation Under Uncertainty,” which recently appeared in this Journal (September 1967), Houng-Yhi Chen argues [1, pp. 313–314] that “Robichek and Myers' criticism [2, 3] of the use of the risk-adjusted discount rate is unfounded,” and suggests that our “conclusions must be based in part on a misunderstanding of the risk-adjusted discount rate method.” These charges are without foundation, as we will show here.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 3 , Issue 4 , December 1968 , pp. 479 - 483
Copyright
Copyright © School of Business Administration, University of Washington 1968

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References

1.Che, H. Y., “Valuation Under Uncertainty,” Journal of Financial and Quantitative Analysis, II (September 1967), pp. 313–325.Google Scholar
2.Robichek, A. A., and Myers, S. C., “Conceptual Problems in the Use of Risk-Adjusted Discount Rates,” Journal of Finance, XXI (December 1966), pp. 727–730.Google Scholar
3.Robichek, A. A., and Myers, S. C., Optimal Financing Decisions (Englewood Cliffs, N. J.: Prentice-Hall, Inc.), 1965.Google Scholar