If Left to Decide the Level of Risk on Their

question 67

Multiple Choice

If left to decide the level of risk on their own, banks or other intermediaries will generally accept _______ risk, because they fail to consider the additional costs of failure that the community at large must bear.

• A)too much
• B)too little
• C)the appropriate amount of
• D)none of these answers are correct

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Definitions:

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash flow to recover the cost of the investment.

Salvage Value

The projected sum an asset is expected to fetch at the end of its service life.

Cost Savings

The reduction in costs achieved through efficiency improvements, strategic purchase, or avoiding unnecessary expenses.

CCA Class

In Canadian taxation, a classification system for capital assets that determines the rate at which they can be depreciated.