In a Decentralized Organization, Performance Evaluations Encourage Managers to Behave

question 50

True/False

In a decentralized organization, performance evaluations encourage managers to behave as if their own personal goals are congruent with the goals of the company as a whole.

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Definitions:

Beta

The assessment of a stock's price movements compared to the aggregate market.

Unsystematic Risk

The risk associated with individual assets, such as a company's stock, that can be mitigated through diversification.

Beta

A standard for evaluating the unpredictability, or fundamental risk, of a security or diversified portfolio in contrast with the entire market.

Non-diversifiable Risk

The portion of risk that can't be eliminated through diversification, often related to systemic factors affecting all investments.