Which of the Following Are Examples of Diversifiable Risk

question 107

Multiple Choice

Which of the following are examples of diversifiable risk?
I.earthquake damages an entire town
II.federal government imposes a $100 fee on all business entities
III.employment taxes increase nationally
IV.toymakers are required to improve their safety standards

• A)I and III only
• B)II and IV only
• C)II and III only
• D)I and IV only
• E)I, III, and IV only

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Definitions:

Markup

The amount added to the cost of a product to determine its selling price, usually expressed as a percentage of the cost.

Differential Analysis

The process of comparing the costs and benefits of alternative business decisions.

Processing Cost

The expenses incurred in the course of transforming raw materials into finished products.

Differential Income

Definition: The difference in income between two alternative business decisions, focusing on the incremental or additional revenue generated.