This document discusses key concepts related to risk and uncertainty in capital budgeting. It defines risk as the possibility that actual returns will deviate from expected returns, while uncertainty refers to situations where the probabilities of outcomes cannot be estimated. It also covers standard deviation and the coefficient of variation as measures of risk, and how firms can incorporate risk into capital budgeting decisions through using risk-adjusted discount rates or certainty equivalents. Diversification and a project's systematic versus unsystematic risk in a portfolio context are also addressed.