Top Executives at Jordan, a U

question 35

Multiple Choice

Top executives at Jordan, a U.S.consulting firm, are debating whether or not to expand into a country with a great deal of violence by staffing mostly with U.S.personnel.A vice president argues that Jordan should forgo sending its employees there because of the high risk for them of kidnappings in the region.Which of the following statements best supports the vice president's position?

• A)There is a high correlation between violence and life-threatening natural disasters.
• B)Violence is a harbinger of additional risks that affect operations negatively.
• C)Local personnel are immune from violence and are capable of filling positions.
• D)The ability to evacuate people when necessary is much slower than it was in the past.

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Definitions:

Fad Effect

A temporary period of high demand for a certain product or service, often without a basis in the product's qualities or utility.

Liquidity Effect

The impact that changes in the supply of money have on interest rates, typically where an increase in money supply leads to a decrease in interest rates.

Neglected-firm Effect

The phenomenon where lesser-known or less-followed stocks generate higher abnormal returns than their well-followed counterparts.

Excess Returns

The return on an investment that exceeds a benchmark or risk-free rate, indicating the additional compensation for taking on risk.