6/9/19 Study session

Question 1

___________ is a risk analysis technique that is based upon utility theory. The “utility” is how much a certain sum of money is worth to the investor. It makes the decision maker stipulate at what point he or she is indifferent to the choice between a certain amount of money and the expected value of a risky amount.

Answer 1

Certainty equivalent adjustments

Question 2

The four perspectives of the balanced scorecard approach to management are:

Answer 2

Customer knowledge, financial performance, internal business processes, learning and growth.

Question 3

Multiple (departmental) rates are preferred when:

Answer 3

1) Several products are produced

2) Products do not pass through the same processes or departments

Question 4

The _________ states that the maturity date of the financing for an asset or project should match the maturity of the related asset

Answer 4

maturity matching concept

Question 5

The accounting rate of return is calculated using what formula?

Answer 5

Average operating income/initial investment

Question 6

Payback method formula

Answer 6

Cash outflow on investment/Annual Cash inflow AFTER TAX