What Does "Risk Shifting" Imply

question 75

Multiple Choice

What does "risk shifting" imply?

• A)When faced with bankruptcy, managers tend to invest in high-risk, high-return projects.
• B)When faced with bankruptcy, managers do not invest more equity capital.
• C)When faced with bankruptcy, managers may make accounting changes to conceal the true extent of the problem.
• D)When faced with bankruptcy, managers invest in low risk projects to conserve capital.

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Definitions:

Employer-Sponsored

A program or benefit provided by an employer to its employees, often including health insurance, retirement plans, and educational assistance.

Roth IRA

An individual retirement account allowing contributions to grow tax-free, with qualified distributions also being tax-free.

Single Life Annuity

A type of annuity that only provides payments for the remainder of an individual's life, ceasing upon their death.

Annuity Contract

A written agreement with an insurance company where the company agrees to make periodic payments to a person in return for a premium or series of premiums.