All of the Following Are Characteristics of the Liability Risk

question 61

Multiple Choice

All of the following are characteristics of the liability risk that most people face EXCEPT

• A)a lien may be placed on your income and assets to satisfy a legal judgment.
• B)substantial legal expenses may be incurred defending the claim.
• C)there is no upper limit on the amount of the loss.
• D)owning liability insurance eliminates the possibility of being held legally liable.

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Definitions:

Crossover Rate

The rate at which two different projects achieve the same net present value, often used in capital budgeting.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are worth more than their cost, considering the potential for profitability and risk.

Corporate Finance

The division of finance that deals with financing, capital structuring, and investment decisions in corporations.

Optimal Choice

The best possible selection among various alternatives based on certain criteria or constraints.