B1 MCQ Flashcards
A response to risk that involves the disposal of a business unit, product line or geographical segment it called ___
risk avoidance
self-insuring or simply tolerating dull exposure to risk is know as what
acceptance
insuring against losses or entering int joint ventures to address risk is know as
risk sharing
a repose to risk that involved the diversification of product offerings rather than the elimination of a produce offering is called
EX?
reduction
Relocation of product lines
if management is unable to share inherent risk then ___
it will be equal to residual risk
short term financing __ interest rate risk and long term financing ___ credit risk
Increases, decreases
how is cost of debt computed
effective interest rate * net tax (1-T)
optimal level of inventory is affected by
the time required to receive inventory
the cost per unit of inventory
The cost of placing of placing on order impacts order frequency
the primary reason for a company to agree to a debt covenant limiting the percentage of its long term debt would be to what
reduce the coupon rate on new bonds being sold
___ costs are assigned to goods that were either purchased or manufactured for resale
product costs
if an investor’s certainty equivalent exceeds the expected return on an investment then the investor is ___
risk seeking
When an investor’s certainty equivalent is less than the expected rate of return then they are considered
risk averse
IRR is the rate of interest where NPV = ?
0
