Suboptimization Occurs When

question 11

Multiple Choice

Suboptimization occurs when

• A) a division or functional unit views itself as a separate entity and refuses to cooperate with other divisions or units to the detriment of the organization as a whole.
• B) there is a failure to produce at or near full capacity.
• C) individuals are placed into positions not suited to their abilities.
• D) managers tend to focus more of their attention on those aspects which are measurable than on those which are not.
• E) managers concentrate too much on short-term performance objectives.

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Definitions:

Bond Ratings

Bond ratings are assessments made by credit rating agencies about the creditworthiness of a bond issuer, which affect the interest rates bonds carry.

Default Risk

The risk that a borrower fails to make the promised loan or bond repayments to the lender or bondholders.

Maturity Risk

The risk associated with the length of time until the face value of an investment is returned, affecting its susceptibility to interest rate changes.

Long-Term Bond

A bond with a maturity date extending beyond 10 years, offering higher yields to compensate for the increased risk associated with the longer duration.