Often High-Risk Decisions Generate Larger Returns While Conservative Decisions Generate

question 163

Essay

Often high-risk decisions generate larger returns while conservative decisions generate lesser returns. From a financial management standpoint does this make sense? Also, what can a financial manager do to reduce risk while increasing the firm's financial return?

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Definitions:

Duty of Diligence

The obligation to perform work with careful attention, effort, and thoroughness, particularly in a professional or legal context.

Profit of Shareholders

The portion of a company's profits that is allocated to stockholders, often seen as a primary goal of businesses to maximize shareholder value.

Shareholder Orientation

A business approach that prioritizes the interests and value maximization for shareholders, often guiding strategic and operational decisions.