Which of the Following Would Be Considered an Acceptable Penny-Pinching

question 56

Multiple Choice

Which of the following would be considered an acceptable penny-pinching strategy?

• A)offer company equity instead of paying employees up front
• B)never offer discounts on the sale of your product or service
• C)never outsource tasks
• D)don't pay vendors until the business is successful

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Definitions:

Short Sell

The practice of selling a borrowed security with the intention of buying it back later at a lower price to profit from the price difference.

Arbitrage Pricing Theory

A financial model that estimates the return of an asset by considering multiple risk factors and their respective risk premiums, excluding unsystematic risk through diversification.

Nonsystematic Risk

The risk associated with a specific issuer of a security, also known as idiosyncratic or unsystematic risk, that can be reduced through diversification.

Well-Diversified Portfolio

An investment portfolio that includes a mix of assets (e.g., stocks, bonds, real estate) to reduce risk through diversification.