Which of the Following Are NOT Ways Risk Management Can

question 11

Multiple Choice

Which of the following are NOT ways risk management can be used to increase the value of a firm?

• A) Risk management can help a firm maintain its optimal capital budget.
• B) Risk management can reduce the expected costs of financial distress.
• C) Risk management can help firms minimize taxes.
• D) Risk management can allow managers to defer receipt of their bonuses and thus postpone tax payments.
• E) Risk management can increase debt capacity.

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Definitions:

Economic Efficiency

A scenario in which the allocation of resources is aimed at maximizing the creation of goods and services.

Benefits Exceed

A term indicating that the advantages or positive outcomes of a decision or situation outweigh the costs or negative outcomes.

Activity Costs

The expenses associated with specific activities or processes within a business, often analyzed for cost management purposes.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that sellers are willing to supply, holding other factors constant.