All of the Following Statements About the Administration of a Risk

question 53

Multiple Choice

All of the following statements about the administration of a risk management program are true EXCEPT

• A)The risk manager is an important part of a firm's management team.
• B)A risk management policy statement can be used to educate top executives about the risk management process.
• C)If a risk management program is properly designed,periodic review of the program is unnecessary.
• D)In order to properly identify loss exposures,the risk manager needs the cooperation of other departments.

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Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained rather than being paid out as dividends to shareholders, used for reinvestment in the business, debt reduction, or other purposes.

Cost of Equity

The return that investors expect for investing in a company's equity, often calculated using models such as the Capital Asset Pricing Model (CAPM).

Floatation Costs

Expenses incurred by a company in issuing new securities, including underwriting fees, legal fees, and registration fees.

Tax Effect

The impact of taxation on business and investment decisions, including the influence of taxes on cash flows, investment returns, and financial planning.