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

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  • Litzenberger, Robert H.
  • Jones, Charles P.

Abstract

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.

Suggested Citation

  • Litzenberger, Robert H. & Jones, Charles P., 1969. "Adjusting for Risk in the Capital Budget of a Growth-Oriented Company: Comment*," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 4(3), pages 301-304, September.
    • Handle: RePEc:cup:jfinqa:v:4:y:1969:i:03:p:301-304_01
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