Management Has the Responsibility, and the Ability, to Take Action

question 28

Multiple Choice

Management has the responsibility, and the ability, to take action to reduce risks or to lessen the impact al nearly all risks an organization faces.The steps taken by management to lessen the risk or reduce the impact of the risk, are referred to as:

• A)Programs
• B)Risk assessment
• C)Information evaluation
• D)Controls

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Definitions:

Risk Adjusted Discount Rate

A rate used in capital budgeting that adjusts for the risk of cash flows, providing a way to account for the riskiness of the project.

NPV

Net Present Value (NPV) is a financial metric used to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.

IRR

The Internal Rate of Return is a financial measurement employed to gauge the potential profit of investments.

Flexibility Option

An investment option that provides the holder with the ability to respond to changes in the financial market or business environment.