The Risky Shift Phenomenon Is When Groups Make

question 2

Multiple Choice

The risky shift phenomenon is when groups make

• A) Riskier decisions than individuals
• B) Make less risky decisions than individuals
• C) Make decisions that are either more risky or less risky than individuals
• D) When groups fail to consider the risky shift they may be making

---

Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting what the asset can be sold for or its scrap value.

Capital Lease

A lease agreement in which the lessee records the leased asset as an asset in its balance sheet, and the lease payment obligations as liabilities.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.