Risk That Affects Many Businesses at the Same Time Is

question 15

Multiple Choice

Risk that affects many businesses at the same time is called _____ risk, while risk associated with individual businesses is called _____ risk.

• A) asymmetric; symmetric
• B) symmetric; asymmetric
• C) systematic; idiosyncratic
• D) idiosyncratic; systematic

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Definitions:

Variable Cost

A cost that varies with the level of output or production volume.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Depreciation

The allocation of the cost of an asset over its useful life, reflecting the reduction in value owing to wear and tear, age, or obsolescence.

Sensitivity Analysis

The study of how the variation in the output of a model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of a model.