BEC - 2

Question 1

ROI

Answer 1

Income / Investment

Question 2

Capital Turnover

Answer 2

Sales / Investment

Question 3

NPV

Answer 3

PV Cash Inflows - Cost

Question 4

Beta

Answer 4

Shows the relationship between the return of an individual asset and the return of the entire class of that asset, as reflected in a BENCHMARK return for the class

Question 5

Company Specific Risk

Answer 5

aka firm-specific risk and diversifiable risk are UNSYSTEMATIC RISK. Includes those elements of business risk that can be eliminated through diversification. Specifically, this risk can be mitigated by diversification of projects, investments, etc.

Question 6

What are the top and bottom DRP priorities?

Answer 6

Top: Mission Critical
Bottom: Task Critical

Question 7

Elastic Demand

Answer 7

Percentage change in demand is greater than percentage change in price.
An increase in price would result in a greater than proportionate decrease in quantity, causing a decrease in total revenue. A decrease in price would result in a greater than proportionate increase in quantity, which would cause an increase in total revenue.

(Elasticity coefficient > 1)

Question 8

The 3 major steps in the COSO model of control monitoring include:

Answer 8

1. Establish a foundation for monitoring
2. Design and execute monitoring procedures
3. Assessing and reporting control of evaluation results

Question 9

Internal control monitoring is considered a:

Answer 9

Component of internal control.

Question 10

CAPM incorporates both:

Answer 10

Time value of money (using risk-free rate of return)

Element of risk (beta)