Which of the Following Statements Concerning Risk Management Is NOT

question 19

Multiple Choice

Which of the following statements concerning risk management is NOT CORRECT?

• A) Risk management can reduce the volatility of cash flows,and this decreases the probability of bankruptcy.
• B) Risk management makes sense for firms directly engaged in activities that involve commodities whose values can be hedged,but it doesn't make much sense for most other firms.
• C) Companies with volatile earnings pay more taxes than companies with more stable earnings due to the treatment of tax credits and the rules governing corporate loss carry-forwards and carry-backs.Therefore,our tax system encourages risk management to stabilize earnings.
• D) Risk management can reduce the likelihood of low cash flows,and therefore reduce the probability of financial distress.
• E) Risk management involves identifying events that could have adverse financial consequences and then taking actions to prevent and/or to minimize the damage caused by these events.

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Definitions:

Vocational Identities

The aspect of a person's identity associated with their work roles and the process of developing this sense of self in relation to one’s occupation and career path.

Adolescents

Individuals in the transitional stage of development between childhood and adulthood, typically between the ages of 10 and 19.

Identity Moratorium

A stage in Erikson’s theory of identity development where an individual is actively exploring options but has not yet made a commitment.

Temporary Roles

Positions or functions assumed by individuals for a limited period, often characterized by specific responsibilities that do not become permanent aspects of one's identity.