One of the Managers at RDK Has a Successful Track

question 112

Multiple Choice

One of the managers at RDK has a successful track record that goes back several years.As a result, he has become extremely confident in his judgment, and has begun to make decisions without taking the time to evaluate contingencies that he feels are not relevant.This has led to some mistakes recently.The over-confidence exhibited by this manager is an example of what?

• A) Cognitive bias
• B) Intelligent risk-taking
• C) Executive judgment
• D) Value capability

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Definitions:

Internal Rate of Return (IRR)

A financial metric used to estimate the profitability of potential investments.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Net Present Value (NPV)

The variance between the current value of incoming cash and the current value of outgoing cash throughout a specific duration.